Crime: Rape

Lord Campbell-Savours: asked Her Majesty's Government:
	To what extent DNA and other forms of personal identification could be retained and of assistance in the identification of false accusers in rape investigations.

Lord Goldsmith: My Lords, DNA and fingerprint evidence can be retained only if the complainant gives written consent. There are no plans to compel the complainant in relation to any crime to agree to the retention of any such material. In my view, it would be quite wrong to do so.

Lord Campbell-Savours: My Lords, is not one of the lessons that we learn from the Warren Blackwell case that, by changing their names, false accusers can hide their identity? In the light of that, why cannot we give judges in the trial court and in the Court of Appeal, where a prosecution for perjury is inappropriate perhaps for reasons of ill health, the right to order that false accusers' DNA is not only taken but retained to help the police at an early stage in future rape inquiries?

Lord Goldsmith: My Lords, I think that I have said in this House probably three times already that, following the Warren Blackwell case and what the Court of Appeal said, the law is being reviewed by Ministers. But I have to say this about the idea that a complainant should be required to give their DNA and fingerprints and have them retained: at a time when we are seeking to encourage victims of crime to come forward, nothing could be more likely to discourage people from doing so than suggesting to them that they should be treated like criminals by having their fingerprints and DNA put on the national database.

Earl Ferrers: My Lords, is the noble and learned Lord suggesting that, once a DNA sample has been taken, it is thrown away?

Lord Goldsmith: My Lords, in relation to those who give DNA voluntarily—for example, victims of crime may be asked for a swab to be taken so that the DNA profile can be analysed in order to identify someone else and to eliminate that person from the case—the DNA is not put on to the national database unless that person gives express written consent to that effect. I am sure that that is right.

Lord Faulkner of Worcester: My Lords, did my noble and learned friend read the report in last Thursday's Guardian, in which it was said,
	"Research published yesterday by the Crown Prosecution Service ... and Home Office Inspectorates estimates that of the 50,000 rapes thought to occur each year, between 75% and 95% are never reported. And almost a third of reported cases recorded by police as 'no crime' should have been properly investigated as rape"?
	Are those not the real concerns that we should have about the problems of rape, and do they not rather overwhelm the sort of statistic that my noble friend Lord Campbell-Savours continues to bring back to this House?

Lord Goldsmith: My Lords, I agree with my noble friend that the real and very serious problem is the number of people who suffer serious crime—and it is a serious crime—but do not have the confidence to come forward and report it. We need to deal with that. Of course one miscarriage of justice is one too many, but it is very important that we do not discourage other victims of crime from coming forward.

Lord Thomas of Gresford: My Lords, does the noble and learned Lord agree that his Answer is rather surprising, because it goes against Part 3 of the Serious Crime Bill, which we will debate tomorrow and which will introduce a power to database-mine all the databases that people have in this country? Does he think that something of this sort is along the lines that the Government already propose?

Lord Goldsmith: My Lords, I do not think that my Answer was at all surprising. I would expect the majority of Members, if not the entirety of this House, to agree that if someone comes forward as a victim of crime—a complainant—and gives their DNA or fingerprints, that should not be compulsorily retained.

Lord Campbell-Savours: My Lords, my noble and learned friend is concerned essentially about the low conviction rate. We all want more guilty men to go to prison; they should be in prison, and we want the conviction rate to go up. Is it not about time that we revisited the law? Increasingly, both in here and outside in the country, more and more anomalies in the law are being reported.

Lord Goldsmith: My Lords, I am not sure that I know precisely what my noble friend has in mind. He will be aware of two things. First, as has already been referred to, a recent important joint report by the inspectorates of the Crown Prosecution Service and Her Majesty's constabulary has looked at the way in which rape cases in particular are dealt with by the police and the prosecutors. Secondly, he will be aware that the Government issued a consultation paper at the end of last year; the Government are now considering the responses, which ask questions about whether aspects of the law should be changed in this field.

The Earl of Onslow: My Lords, the noble and learned Lord quite rightly condemns the taking of DNA from people who should not give it, so why is it that the DNA base has increased enormously and contains the DNA records of a lot of people who have not been charged with anything? Is that not against our traditional British liberties?

Lord Goldsmith: My Lords, the noble Earl needs to distinguish two categories of person. One category is of people who are charged, or arrested and sometimes charged or sometimes not, sometimes prosecuted, sometimes acquitted or sometimes convicted of a crime. The category about which I am talking is of persons who have come forward as complainants, saying, "I have been the victim of a crime". Their DNA and fingerprints may be taken. I simply say, and I stand by this, that it should not be compulsory for those to be retained. If those people wish to consent to that, they may do so.

Taxation: Corporate Tax

Lord Roberts of Conwy: asked Her Majesty's Government:
	What steps they are taking to ensure that the United Kingdom's corporate tax regime is sufficiently competitive to persuade multinational companies based in the United Kingdom to remain.

Lord Davies of Oldham: My Lords, as announced in the Budget 2006 and reiterated in their recent Pre-Budget Report, the Government are committed to a business tax system that supports business competitiveness and operates fairly across businesses and sectors. The Government have undertaken extensive engagement with business in recent months to understand better its concerns in relation to tax and to ensure that we are addressing them. The recommendations of the Varney review of HMRC links with large business, published on 17 November, will improve the responsiveness of tax administration to the needs of business.

Lord Roberts of Conwy: My Lords, I am grateful to the noble Lord for that reply, which lacks a certain amount of the urgency that is required with this problem. Is he not aware that while our headline corporation tax rate has remained unchanged since 2000, 24 of the other 29 members of the OECD have cut their rates and we have fallen from eighth most favourable position to 19th, that the business tax burden as a percentage of GDP is higher here than in the United States, Germany, France, Ireland and the Netherlands, and that we are slipping in the overall, economy-wide tax league too? Will not this worsening business environment frighten off business and investment and encourage them to go elsewhere?

Lord Davies of Oldham: My Lords, the business environment is not deteriorating. The noble Lord should not merely quote corporation tax rates. He will recognise that the Germans, in cutting their rates, have imposed alongside that other increases in taxation with the result that German competitiveness has not significantly increased against the UK. The noble Lord will also recognise that the issue of increased tax take is a reflection of the extraordinary success of the economy. More people are in work and therefore they pay more tax. Profits are higher and therefore companies pay more tax. Consumption is buoyant and therefore VAT receipts are higher. That is a record of success.

Lord Rogan: My Lords, as the noble Lord, Lord Roberts of Conwy, has indicated, UK corporation taxes are becoming uncompetitive internationally. It is a particular problem for businesses in Northern Ireland which has a land border with the Republic of Ireland where the corporation tax rate is 12 per cent. Does the noble Lord agree that the solution is to reduce the overall rate of corporation tax in the United Kingdom?

Lord Davies of Oldham: My Lords, we are not convinced of that argument at the present time. Those countries which are cutting corporation tax are in several cases doing so from a rate far higher than our 30 per cent and so will not produce an extravagantly improved competitive position against Britain, particularly when we take in the round the full range of business taxation. However, I want to come back on a point made by the noble Lord, Lord Roberts, about whether we are addressing these matters urgently. Indeed we are. The reason why the Varney review was set up and why the Chancellor is holding regular high-level meetings with business is because we realise that there are issues to be discussed.

Baroness O'Cathain: My Lords, in his waking hours of the morning or the middle of the night, will the Minister contemplate what has actually happened in the Republic of Ireland? Corporation tax has been reduced to 12 per cent, the growth rate has not fallen below 6 per cent since, and the annual value of GDP per head of the population is some £10,000 higher than in the UK—all from a much less favourable position several years ago. Is the noble Lord saying that that is just a mirage?

Lord Davies of Oldham: My Lords, of course it is not a mirage, but there are some specific features of the Irish economy which are not general to the much larger economies of the rest of Europe. That is why we have not seen a hell-bent dash by other large economies to follow the Irish model. However, we can certainly learn some lessons. As for being awake at night, the only reason I was awake last night was to support England's cricket team in its wonderful victory.

Lord Newby: My Lords, does the noble Lord agree that the nirvana for business which he describes is not a vision that many businesses would accept? Does he further agree that the headline rate of corporation tax is seen as an important issue and in this country is no longer perceived to be one of the lower ones among our competitors? Is there not an easy way to tackle this; namely, to begin to abolish some of the corporation tax allowances, which at best are ill understood and at worst are positively harmful?

Lord Davies of Oldham: My Lords, UK taxes on corporate income are in fact lower than in 10 of the other 15 comparable European Union countries, so it is not the case that we are heavily taxing business. However, we recognise that there are issues to discuss, particularly those concerning regulation and, taking one of the points made by the noble Lord, the way tax is imposed on businesses and how regulation proves to be irksome. That is exactly why Her Majesty's Revenue and Customs has produced a review and is now addressing itself to business interests. It is also why the Chancellor is holding his high-level meetings.

Lord Stoddart of Swindon: My Lords, the level at which corporation tax is set does not seem to deter one industry after another in this country being taken over by foreign firms. Did the Minister hear on the news today that the number of people employed in the manufacturing sector has fallen yet again? I would be interested to know what the Government are going to do to increase the percentage of GDP involved in manufacturing industry, because before very long we will not have any left.

Lord Davies of Oldham: My Lords, the purchase by foreign interests of British firms is a private matter. We should reflect on the fact that such decisions are taken in the interests of those who have the resources to pay. I hear what the noble Lord says about manufacturing industry. He is right, of course, that it is a declining share of the British economy. Its declining share in the past decade is against a background of the most successful economy for generations.

Lord Northbrook: My Lords, in a recent research study by the CBI, the complexity of the corporation tax rules came out as the top complaint of the 350 FTSE companies surveyed. What can the Government do to make the regime less complex so that multinational companies will not move overseas?

Lord Davies of Oldham: My Lords, that representation led the Government to address the complexity and difficulties of corporation tax. That is why the arrangements I described in previous answers obtain. We are concerned to ensure that corporation tax is competitive with the other major economies and that we can simplify it in such a way as to make the burdens on business as light as possible.

EU: Financial Services Action Plan

Lord Willoughby de Broke: asked Her Majesty's Government:
	What will be the direct and indirect costs to the United Kingdom's financial services industry of implementing the European Commission's proposed financial services action plan.

Lord Davies of Oldham: My Lords, it is impossible to give a definitive estimation of the costs, either direct or indirect, of implementing the financial services action plan as a whole. All individual pieces of European legislation, however, are subjected to a full regulatory impact assessment prior to implementation in the United Kingdom.

Lord Willoughby de Broke: My Lords, I am grateful to the Minister for that admission that the Government do not know what the cost will be of this huge financial services action plan. Do the Government accept that London is the biggest and most successful financial services centre, not only in Europe but in the world, which earns the Exchequer about £40 billion a year? Do they further accept that the 22 directives in the financial services action plan risk fatally undermining London's competitive edge? If they do, will they seek a derogation from those directives to maintain London's global supremacy in financial services?

Lord Davies of Oldham: My Lords, we will not seek a derogation because we are busy signing up to the directive. We are doing so for exactly the reason identified by the noble Lord. Of course the financial sector in the City is of great importance. It accounts for around 7 per cent of the UK economy and more than 1 million UK jobs. It is because of that strength that we think the City will benefit from the more open market in finance which will result from the action plan. We see the City as poised to reap success from it in due course.

Lord Newby: My Lords, does the Minister accept that, while the City would agree that it stands to benefit from the move towards a single market in financial services across Europe, there is a widespread view that neither the Treasury nor, more important, Treasury Ministers have taken the matter sufficiently seriously? Will he, first, urge his colleagues in the Treasury to devote more resources to this area, which has huge implications for the success of the City, and, secondly, ensure that senior Ministers turn up on time and stay until the end of relevant meetings so that the City's concerns are not underrepresented in Brussels by the Government?

Lord Davies of Oldham: My Lords, I was on the brink of agreeing wholeheartedly with the noble Lord in the first part of his question, when he asked us to take this issue very seriously against a background of how important it is for the City and the wider economy. He quotes one instance when, for very important reasons, a Minister was not able to stay the course at a meeting. That was several years ago, and I do not think the House benefits from raking over old history, which we indicated at the time would not be repeated.

Lord Vinson: My Lords, is the Minister not rather too sanguine about yet another imposition of regulation from Brussels? The Dutch Government did a survey of the total cost to the Netherlands of EU regulations over the past 20 years, and found that it came to 6 per cent of its GDP. If we take a much lesser figure and say that EU regulations have cost us 2 per cent of our GDP, the amount is around £20 billion a year, much of it on excessive and unnecessary regulation. Should we not be a little more careful about accepting some of these diktats from Brussels and put our own interests first on occasion?

Lord Davies of Oldham: My Lords, we certainly put our own interests first. I reassure the noble Lord that we are addressing strongly the necessity for better and more limited regulation from Brussels. We are aided by the fact that the Commissioner for the Internal Market and the Commissioner for Competition, both of whom are coming to London on 20 February to discuss these issues in the Treasury, are also convinced that an excessive number of directives harms European economies and the cause of Europe. They are fitting rather more into the British perspective on these issues.

Lord Foulkes of Cumnock: My Lords, is my noble friend aware that the United Kingdom does not have just one successful financial centre and that Edinburgh is also a thriving financial centre and probably one of the only serious competitors to London? However, does he agree that the future of the city of Edinburgh, the Royal Bank of Scotland and all the other excellent developments taking place would be put in serious jeopardy if the Scottish National Party took over in the Scottish Parliament and broke up Britain, with all the consequences that would have, not just for Scotland but the whole United Kingdom?

Lord Davies of Oldham: My Lords, my voluminous notes on Edinburgh as a finance centre replicate almost precisely what my noble friend has just said.

Baroness Noakes: My Lords, the Minister will recall that late last month we debated the Markets in Financial Instruments Directive, which is just one part of the financial services action plan but which cost probably £7 billion or thereabouts. We were told at that stage that only the United Kingdom and Romania would meet the transposition deadline of the end of January. What will the Government do to ensure that, if we go through the pain and cost of implementing these directives, our European colleagues do the same?

Lord Davies of Oldham: My Lords, there is every indication that the serious large economies in Europe intend to do the same, although they are moving more slowly than we are, but if the United Kingdom and the City of London cannot lead with confidence in this area, which financial sector could?

Lord Pearson of Rannoch: My Lords, when the Minister says that all EU regulations have an EU impact assessment attached to them, does he understand that some of us do not see the point if he cannot answer this Question? Could I help him by asking whether he is aware of the recently published Open Europe study, which finds that the transposition costs alone of these 22 directives will amount to £23 billion over the next three years and that the opportunity costs of the City migrating overseas are literally incalculable?

Lord Davies of Oldham: My Lords, I wondered where Open Europe originated from, and now I have an element of affinity with regard to cost. No one could answer the Question on the costs sustained in the development of the financial market. We do not know the rate of its development or the transfers that will occur. We are conscious that it puts the City of London at the centre of a much more open market. The City has proven itself to be supremely competitive under existing conditions; here is an opportunity for it to do even better.

Bankruptcy

Lord Baker of Dorking: asked Her Majesty's Government:
	How many individual bankruptcies were recorded in 2006.

Lord Truscott: My Lords, there were 62,956 bankruptcy orders in England and Wales in 2006.

Lord Baker of Dorking: My Lords, is the Minister aware that the figures he has just given to the House show that since 2002, when the Government eased bankruptcy regulations, the number of bankruptcies and IVAs has gone up by four times? During that period there has been no increase in the rate at which new businesses are formed. The Government have encouraged the feckless and improvident at the expense of the prudent and hardworking. Can the Minister recognise that the three great achievements of his Government have been to make it easier for people to get drunk, buy drugs and go bankrupt? Will that feature in the Blair legacy?

Lord Truscott: My Lords, there are a number of reasons why the level of individual insolvencies has increased, including the availability of credit, unemployment, other economic factors and specific reasons relating to the individuals concerned. I do not accept the noble Lord's point that legislation has led to that increase in insolvency; after all, the number of those in insolvency has risen in Northern Ireland and Scotland, where people have not been affected by the same legislation.

Lord Newby: My Lords, will the Minister accept that there is another reason why there are such high levels of bankruptcy; that is, the very low levels of financial literacy in the UK? Will he further accept that the Government's action in appointing Mr Thoresen to undertake a review in this area is, frankly, too little, too late? Does he agree with the IFS School of Finance that financial education should now be included in the national curriculum?

Lord Truscott: My Lords, the noble Lord has a valid point that far more needs to be done to educate people about indebtedness and how to deal with it. The Government are already doing a lot in that area; for example, we are giving grants totalling £47.5 million for advice agencies to hire and train more than 500 new debt advisers. We are giving an additional £21 million-plus to Citizens Advice this year to help it to provide support services and an extra £1 million to the National Debtline. In addition, we are working to ensure that we provide information and advice to young people—so we are doing a lot in this area, which will benefit hundreds of thousands of people.

Lord Swinfen: My Lords, in the 1960s and 1970s one could borrow only one and a half times one's income and up to 85 per cent of the value of a property. Today one can borrow up to 125 per cent of the value of the property and about five times one's annual income. To what extent has that affected the rate of bankruptcies?

Lord Truscott: My Lords, I am not sure that it has. The fact is that we have record low historic levels of interest rates, record levels of employment and GDP growth in the UK has now seen an unbroken 58 consecutive quarters of positive growth, so the economic background and environment is generally improving. However, it is true that indebtedness in certain sectors of society is increasing. The issue is how a minority of people deal with those debts. The level of insolvency in the UK is something like a quarter or a fifth of the levels in the United States, so I do not see the picture in the same terms as the noble Lord.

Baroness Wilcox: My Lords, if things are so good, how come people are struggling to hold on to their homes? There have been 91,000 court orders for repossession this year alone. Are the Government in the least concerned that the level of debt that they have encouraged is now throwing thousands of people into the misery of bankruptcy and repossession? What is the Minister going to do about it?

Lord Truscott: My Lords, of course the Government are always concerned about repossessions—but I recall the late 1980s and the early 1990s, when the levels of repossession went through the roof and when interest rates, under the previous Conservative Government, went up to 15 per cent. That created real difficulties for home owners.

Lord Teverson: My Lords, there is great concern about the potential mis-selling of IVAs, individual voluntary arrangements, and the distress that that will cause many in the future. How do the Government view IVAs?

Lord Truscott: My Lords, the noble Lord is correct; there are concerns about the advertising of IVAs. An IVA is a matter between a debtor and his or her creditors and it must be licensed by an insolvency practitioner. Insolvency practitioners are already subject to stringent regulatory regimes which apply both ethical codes and professional standards. The Government are keeping a close eye on that and monitoring it.

Lord Stoddart of Swindon: My Lords, does the noble Lord recall the wise words of a former general secretary of the Labour Party, Morgan Phillips, that the Labour Party owed more to Methodism than to Marxism? The Methodist regime believed in thrift, decency and community rather than in capitalism and market forces.

Lord Truscott: My Lords, it is an interesting philosophical point, but I did not know Morgan Phillips personally so I should not like to comment further.

Television Advertising (Food) Bill [HL]

Baroness Thornton: My Lords, I beg to introduce a Bill to make provision about the advertising of food products on television programme services and for connected purposes. I beg to move that this Bill be now read a first time.
	Moved accordingly, and, on Question, Bill read a first time, and ordered to be printed.

Consumers, Estate Agents and Redress Bill [HL]

Read a third time.
	Clause 18 [Secretary of State's power to require reports]:

Baroness Wilcox: moved Amendment No. 1:
	Clause 18 , page 11, line 6, leave out "may" and insert "must"

Baroness Wilcox: My Lords, I return to this issue one more time. I noted that in Committee I was dissatisfied with the Government's response. Having reread the debate, I consider that it is right to bring this matter back.
	Put simply, this amendment would ensure that when the National Consumer Council publishes a report to give to the Secretary of State, it will also make a copy available to the public. The noble Lord, Lord Borrie, suggested that would infringe the powers in what is now Clause 17, but was Clause 16 on Report.
	I direct noble Lords and the Minister to the exact wording of Clause 17, which states:
	"The Council may publish any report prepared under this section".
	Any report published under that section may not necessarily cover a report prepared for the Secretary of State, as preparing reports for the Secretary of State does not fall within the scope of the NCC's functions as described in Clause 17. Indeed, rather ironically, the National Consumer Council's only statutory duty to report is to the consumer, in Clause 10. Clause 17 does little more than say that the National Consumer Council can publish reports if it wants to, but it has no duty to publish those reports when reporting to the Secretary of State.
	Indeed, I suspect the real reason behind the Government's resistance is that the Secretary of State can commission a report far wider in scope than that available to the National Consumer Council to report to consumers. Under Clause 18:
	"The Secretary of State may direct the Council to prepare ... a report in respect of any matter specified ... which relates to consumer matters".
	The scope of an average National Consumer Council report to the humble consumer comprises,
	"information about consumer matters, information about the views of consumers on consumer matters and information ... as may be prescribed by the Secretary of State by order".
	The second substantive point is that this amendment does not seek to proscribe the National Consumer Council's publication. Rather, it seeks to ensure that there is direct communication and thereby accountability of the information going between the National Consumer Council and the Secretary of State. The National Consumer Council is not a government department, and information transferred from it to the Secretary of State should emphatically not be treated as classified, as it is under the Bill as it stands. This is a serious point, and I hope the Minister will be able to take it on board even at this eleventh hour. I beg to move.

Lord Borrie: My Lords, the noble Baroness mentioned my name in connection with the amendment because at the previous stage I intervened to query the relationship between Clauses 17 and 18. As I understand it—with the aid of a letter that the Minister sent to the noble Baroness, Lady Wilcox, the Liberal Democrat spokesman the noble Baroness, Lady Miller of Chilthorne Domer, and me, which is available in the Library—Clause 17 is on the general power of the National Consumer Council to,
	"prepare a report in relation to any matter falling within the scope of its functions".
	It goes on to say:
	"The Council may publish any report prepared under this section".
	That is the broad and expected facility of the National Consumer Council and its role.
	Clause 18, which I understand better now from the Minister's letter than I had previously done, is rather special. It is a special situation where the Secretary of State, involved in some particular consumer problem, wants the advice of the National Consumer Council and wants, within a specified period a report on some matter relating to consumer affairs. The clause states:
	"The Secretary of State may publish any report submitted under this section".
	I would put it like this. In Clause 18, the National Consumer Council is being specially approached by the Secretary of State for a special governmental purpose, and in effect that report is then in the ownership of the Government as distinct from the National Consumer Council on this special occasion. A discretion should be retained by the Secretary of State because the possibility is that that report, if it is to be full, extensive and what the Secretary of State wants to assist his work, may contain price-sensitive or other information that it is undesirable should be made public either then or generally.
	It seems to me that Clause 18 is a very special power of the Secretary of State to require reports of the NCC. It does not in any way inhibit the normal independence of the National Consumer Council from the Government, and rather, especially in the case of price-sensitive information, the Government wish to retain discretion over what is published. I did not fully understand that when I intervened in the earlier debate, but it seems to me to make a lot of sense. I do not support the amendment.

Lord Razzall: My Lords, I support the amendment. Unfortunately, my noble friend Lady Miller is not able to be here today due to a family crisis, but I know that she would endorse the remarks that I am about to make.
	There is always a suspicion when we hear that the Government are going to have a role in the provision of information. I am afraid that, notwithstanding the fact that this Government brought in the Freedom of Information Act, we are always suspicious when a Government want to have their hands in what may or may not be published. I was struck by the remarks made by the noble Baroness, Lady Wilcox, on Report, when she said:
	"I'm listening to the National Consumer Council being changed from the body it is: brave and strong and able to publish its reports as it has done all these 25 to 30 years, not hindered by the Government in any way, fully funded by government but free to choose its work and to report as it wished".—[Official Report, 30/1/07; col. 157.]
	There can be no better argument for the noble Baroness's amendment.

Lord Truscott: My Lords, I am grateful to my noble friend Lord Borrie for his clear exposition, with which I wholly concur. We had a lively and helpful debate on this amendment on Report. From that debate and the earlier debate in Committee, it is clear that the intention behind the amendment is essentially the need for transparency in the Government's dealings with the new council and public accountability. I can again confirm our wholehearted support for these intentions.
	The discretion afforded to the Secretary of State by Clause 18 not to publish a report prepared for him by the council would be necessary to deal with particular circumstances, such as when the report contained sensitive information that was commercially confidential or price sensitive, as my noble friend Lord Borrie outlined. Such information might be necessary to support the recommendations in the report. However, a requirement on the Secretary of State to publish every report submitted to him might create a deterrent effect on external experts or stakeholders who might be reluctant to provide advice because it might be disclosed. Such advice may be shared with the council only on the understanding that it was not to be made public. Requiring the Secretary of State to publish every report submitted to him under Clause 18 could therefore deter the provision of useful or important information to aid the preparation of the report by the council, to the detriment of the quality of the final report and the subsequent advice provided to the Secretary of State. I cannot believe that that is the intention of the noble Baroness, Lady Wilcox, or the noble Lord, Lord Razzall.
	A key consideration here is that there may be good reasons why the content of reports prepared and submitted to the Secretary of State to aid the decision-making process should not be published. While we envisage that the Secretary of State will generally wish to publish any report submitted to him under Clause 18, it is important that this discretion is retained in order to allow for what is appropriate in each case.
	If the council determines that the issue of the report is one of interest to consumers more generally, as we envisage will generally be the case, Clause 18 does not prevent the council from exercising either or, indeed, both of the powers under Clause 17 or Clause 19(2) to prepare and publish reports or advice and information for the purpose of bringing issues of importance to the attention of the consumer. A report prepared under the powers in Clause 17, for example, that covered the same issue as a report prepared under Clause 18, could be published without information that was considered to be sensitive and in a format that may be more in line with the needs of consumers.
	In light of my explanation and the fact that we have discussed this on several occasions, I hope noble Lords will understand why the Government do not feel able to accept this amendment.

Baroness Wilcox: My Lords, I thank the noble Lord, Lord Razzall, for supporting the amendment. I am not going to press it; I am just going to say that this is the death knell of the National Consumer Council as we knew it. What sort of information will the Government want the National Consumer Council to give them that the general public—the general consumer—cannot know about? Never in the past has the National Consumer Council had such a constraint on it and, if the clause remains, never in the future will the council be taken to be as responsive, as independent and as innocent of the Government's agenda as it has been. I will withdraw the amendment at this stage and hope that my friends in another place may be able to persuade the Government further. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 43 [Standards for handling complaints]:

Baroness Wilcox: moved Amendment No. 2:
	Clause 43, page 26, line 6, at end insert—
	"( ) A regulator must make regulations requiring its regulated providers to have in place and operate appropriate and effective internal complaint handling procedures."

Baroness Wilcox: My Lords, I shall speak also to Amendments Nos. 3 and 4. I am pleased to be able to revisit this issue with what I hope is an improved set of amendments. Amendment No. 2 would place a duty on regulators in Clause 43 to make regulations to require their providers to have in place and operate effective internal complaints-handling procedures. The amendment is complemented by Amendments Nos. 3 and 4 to Clause 46, which connect the proposed new provision in Clause 43 to the list of information that a supplier can be required to provide to the consumer. Overall, the amendments would ensure that regulated suppliers were required to have internal complaints-handling procedures and that the regulators could require the suppliers to communicate to their consumers how these procedures work.
	I do not need to rehearse the arguments that I made both in Committee and on Report in this House. These amendments would put the consumer's response to services at the heart of the consumers Bill. Complaints are not only one of the most accurate measures of how successful the delivery of a service has been but are a vital avenue for the consumer, especially with respect to essential energy and postal services.
	I read with interest the words of the noble Lord, Lord Whitty, on Report. I had hoped that, had he been here, he would have been able to support the slight change in the wording, which he suggested. I agreed with him wholeheartedly when he said:
	"This Bill will not work unless effective mechanisms are in place to ensure that the companies meet the requirements to handle complaints far more effectively than, frankly, either the post or energy sector does at present".—[Official Report, 30/1/07; col. 189.]
	I was pleased that the Government came back with amendments that began to acknowledge the need for a best-practice element in the regulation of energy and postal providers. I hope that today the Government can realise the full potential of the Bill by accepting these amendments. They have the opportunity to send out a message that shows that the Bill will provide an incentive for a new culture in which responsible business practice empowers the consumer. It would be a great shame to miss such an opportunity. I beg to move.

Lord Razzall: My Lords, I support the amendment. My noble friend Lady Miller added her name to a similar amendment on Report. Having read the debates in Committee and on Report, having looking at the correspondence and having listened to what was said by the noble Lord, Lord Whitty, who, after all, will be responsible for this matter in due course—I am sorry that he is not in his place; the compliment that I normally pay him on these occasions is that he is always the best argument as to why we need not worry about this Bill—it seems to me that this has been a drafting issue. I do not think that there is any point of principle between all sides here. The noble Baroness has come up with an alternative to her original amendment which I consider to be better, and I hope that the Government will be in a position to accept it.

Lord Truscott: My Lords, I listened with great interest to the arguments made by the noble Baroness, Lady Wilcox, and others on this issue on Report. I agreed to give it further consideration, as the importance of the need for service providers to deal effectively with consumer complaints is in no way in doubt.
	The position that we have adopted is to give regulators the power to make regulations to prescribe complaints-handling standards that would be binding on suppliers. We took this approach because we believe that a sectoral regulator is best placed to take a view on what is appropriate and necessary within its own sector. These provisions will need to be adaptable and will need to be applied on a sector-by-sector basis, with each regulator being able to take a different approach if required, to meet the needs of each sector.
	On Report, the noble Baroness cited the arrangements in place in the financial services sector. The basis of the approach in that sector stems from paragraph 13(4) of Schedule 17 to the Financial Services and Markets Act 2000, which states that the Financial Services Authority may make rules requiring a company to establish such procedures as it considers appropriate for the resolution of complaints that may be referred to the ombudsman scheme.
	In respect of this legislation, the Financial Services Authority has determined and published the procedures that each company must have in place for the investigation and consideration of complaints. That document sets out a general requirement on firms to operate appropriate and effective internal complaint-handling procedures, and outlines in some detail what that should look like.
	I believe that the intention behind the approach taken in the financial services sector is entirely consistent with the approach that we have set out in the Bill—the need for businesses to handle complaints effectively in the first instance. The Financial Services and Markets Act 2000 confers a power, not a duty, on the regulator to prescribe complaint-handling procedures to be followed by businesses in that sector. The Financial Services Authority has made use of that power to require regulated businesses to adhere to requirements relating to complaint-handling procedures.
	The Bill confers on the regulator a power to prescribe complaint-handling standards. We believe that that is sufficient to ensure that complaints are handled effectively, and it is also in line with the Government's better regulation principles, as it allows each service provider to meet those standards in the way that each provider determines is most suitable for the company, rather than prescribing the procedures that must be followed.
	Regulators are established as independent bodies and must be allowed to function accordingly. We must take into account the simple fact that a regulator has a duty to protect consumers in its sector and to take consumers' interests into account in its decision-making. With the introduction of redress provisions, which industry will have to fund—an important consideration—information about the nature and volume of complaints will be placed in the public domain.
	The existence of a redress scheme to which service providers are required to belong by statute is something new for the sectors concerned here. The budgets for the consumer bodies in the energy and postal services sectors are negotiated directly with Government, and include funding for the handling of complaints. This has provided little incentive for some service providers to give the matter the appropriate attention. With the introduction of these measures, service providers will have to do more to resolve disputes first-hand. Typically, the funding structure for redress schemes is based on a case fee for each complaint referred to the scheme, and that will act as an incentive for service providers to take complaint-handling more seriously. This new statutory requirement will encourage industry to act in a different way and review its internal procedures for handling complaints.
	Regulators are tasked to ensure that the market operates effectively. In relation to complaint-handling, we are adding to their existing armoury and giving them the power to make regulations to prescribe complaint-handling standards that would be binding on providers. A regulator would be failing in its duty to consumers and would be accountable for any decisions not to take appropriate action in the face of any compelling reasons to do so.
	We believe that the vast majority of businesses want to act responsibly. The pressure to attract and to retain customers is a powerful and effective incentive on business to act with integrity and responsibility. While we understand the motivation behind the amendment—I listened carefully to the points made by the noble Lord, Lord Razzall—we feel that the approach that we have chosen is in line with better regulation principles. I hope this explanation provides some reassurance of the merit of our approach.

Baroness Wilcox: My Lords, I feared this would happen. The mighty energy companies will be left to kick this into touch. They have in place a hopeless complaints systems; it is almost impossible for an ordinary consumer to complain about and to fight a wrong meter reading. Now the little energy group that knew what it was doing will be subsumed into the mighty NCC. The NCC will be a huge organisation and will not have the expertise to deal with complaints. My amendment would have been one more way to ensure that these mighty energy companies, which can well afford to do it, established a complaints procedure through which it would be possible for an ordinary consumer to take complaints through himself.
	Instead, we have a Bill that is at the other end of the scale. Redress happens when everything has gone wrong, when one has gone as far as one can go and is right at the end of the line. This would have been such an opportunity for us to ensure that, at last, these energy companies would put in place a good complaints system that people could use. We have missed the opportunity and I am very sorry about that. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 46 [Supply of information to consumers]:
	[Amendments Nos. 3 and 4 not moved.]

The Earl of Caithness: moved Amendment No. 5:
	Before Clause 53, insert the following new Clause—
	"Standards of competence
	(1) Section 22 of the Estate Agents Act 1979 (c. 38) (standards of competence) is amended as follows.
	(2) For subsections (1) and (2) substitute—
	"(1) The Secretary of State shall by regulations made by statutory instrument designate any body of persons as an approved body to which people engaged in estate agency work, including both the sale and lettings of residential property, must belong.
	(2) The approved bodies must make membership conditional on signing up to rules and codes of conduct including rules which—
	(a) prescribe minimum competency standards; (b) ensure that firms have adequate professional indemnity insurance and, as appropriate, client money protection insurance; (c) require a minimum level of professional development per year; and (d) require membership of a redress scheme.""

The Earl of Caithness: My Lords, I make no apology for bringing this amendment, which I moved at earlier stages, before the House. I thank the Minister for his letter between Report and now.
	I shall not repeat the arguments that I made before. Suffice it to say, there is a major problem, which has been recognised by all; the Minister's noble friends Lord Grocott, Lord Davies and Lord Dubs have all tried to address the problem of bad estate agents. The history of the Office of Fair Trading is not a good one; the OFT has shown a great deal of inertia and a lack of appropriate action on this. There is enormous consumer dissatisfaction with estate agents, and it looks from the reports of the Ombudsman for Estate Agents that about one in four is likely to be the subject of a complaint.
	What do the Government do about this? Nothing. They bring in a redress scheme, such as the one that has just been heavily condemned by my noble friend Lady Wilcox with regard to another sector of the industry, but they are not attacking the necessity to license and regulate estate agents. It is absurd and hypocritical that the only unregulated sector in the property-buying business is the estate agents'. Mortgage lenders, financial advisers, conveyancers, solicitors and surveyors are regulated; estate agents are not. Unless the Government accept this amendment, they will be condemning the consumer to a further period of being open to be cheated by estate agents and losing thousands of pounds. I beg to move.

Lord Truscott: My Lords, this is now the third time that we have discussed this amendment in one form or another. The noble Earl, Lord Caithness, has strong views on the need for the positive licensing of estate agents but, as I have explained before during the passage of this Bill, the Government do not agree.
	I do not intend to repeat the arguments again, as they have been made a number of times. The amendment is not a small addition to the Bill. It would be at odds with government policy in this whole area. The Government's intention in this part of the Bill is to improve the current negative licensing regime. In addition to requiring estate agents to belong to approved redress schemes, the Bill will improve the enforcement powers in the Estate Agents Act 1979. Formal record-keeping requirements will provide enforcers with audit trails, making it easier to prove wrongdoing and to take enforcement action. Widening entry and inspection powers will enable enforcers to make proper use of these new powers.
	Expanding the circumstances in which the OFT can consider the fitness of estate agents will enable it to remove rogue agents from the market more easily. In addition, we are confident that compulsory membership of redress schemes will help to drive up standards, as well as compensate victims of misconduct. Improving the negative licensing regime, as outlined, will tackle problems in the industry without driving up costs for consumers. However, if this does not prove to be the case, we will look at the issue again.

The Earl of Caithness: My Lords, what a missed opportunity. What a sad smokescreen the Government are putting up to try to convince people that they are protecting the consumer. They are doing nothing of the sort. The policy became clear in the Minister's last letter to me: it will be left to Europe to sort it out. That is where the action now is. I have no doubt that, just as we are having the energy report attached to the home information packs forced on us by Europe from 1 June this year, we will be standing here discussing this in a few years' time saying that this is what Europe is doing to us on estate agents. The Government have sadly missed the opportunity, which is bad for the consumer. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Earl of Caithness: moved Amendment No. 6:
	Before Clause 53, insert the following new Clause—
	"Estate agency work
	(1) Section 1 of the Estate Agents Act 1979 (c. 38) (estate agency work) is amended as follows.
	(2) In subsection (1) after "land" insert "or who wishes to let, rent or manage residential property".
	(3) In subsection (1)(a) after "such an interest" insert "or manage, rent or, as the case may be, let such a residential interest".
	(4) In subsection (1)(b) after "of that interest" insert "or the management, letting or, as the case may be, renting of that residential interest"."

The Earl of Caithness: My Lords, once again, we have discussed this amendment before. On Report, I had support from Members from all sides of the House: from the noble Lord, Lord Best, on the Cross Benches; from the noble Lord, Lord Dubs, and the noble Lord, Lord Borrie—whom I am delighted to see in his place—on the Labour Benches; and from the noble Lord, Lord Lee of Trafford, on the Liberal Benches. On that occasion, I withdrew the amendment because the Minister said that he would take it away to have another look at it. He has done so, but he has not moved at all. However, it is clear that action needs to be taken. The argument that he used is justified in one sense because the Bill is based on the OFT's report. However, that was a limited report, and it is not our fault that the Government did not do their homework and cover the subject properly. If they had, we would have a very different Bill in front of us. It is important that I move this amendment. I beg to move.

Lord Lee of Trafford: My Lords, I support the noble Earl, Lord Caithness. The phrase for this afternoon is "missed opportunity". It has been used by the noble Baroness, Lady Wilcox, and by the noble Earl, Lord Caithness, and I repeat it. We rehearsed the arguments at length in Committee. Essentially, we believe that those who lease are left naked under the Bill. Those people are, almost by definition, generally less able to afford the proper professional advice that they would normally be entitled to when entering into a leasing transaction, and therefore the redress scheme should apply to the leasing area. In addition, in recent years, we have seen substantial growth in major inner-city flat developments. Many of those flats have been bought by investors who hope to achieve capital appreciation and who, in the course of that appreciation, let the flats. Agents are involved in the letting process, and the redress scheme will not cover them. We support the noble Earl on Amendment No. 6 and will vote with him if he chooses to press it.

Lord Razzall: My Lords, as the noble Baroness, Lady Wilcox, is not rising to her feet—presumably she is the prisoner of a fortunate jailer on this topic—I shall supplement the remarks made by my noble friend Lord Lee. I must declare an interest as a director of a holding company that owns estate and letting agencies. What my noble friend said is entirely correct. In Committee and on Report, I failed to understand the Government's answer to the point made by a number of noble Lords—particularly the noble Earl and the noble Lord, Lord Lee—that the practices that the Bill is designed to improve the regulation of in relation to estate agents apply not only equally but even more to letting agents. Letting agents often operate in markets that are rather different from the average house build, house owner, house sale, house purchase markets that estate agents deal with. This is a wonderful opportunity for the Government to bring control of letting agents in line with the controls that they are bringing in for estate agents.
	The only significant argument from the Government is that they are keeping this under review and will look at the position of letting agents. The problem with that approach is that—in particular with a Government obsessed with having Home Office Bills in the Queen's Speech, almost to the exclusion of everything else—if the opportunity is missed to include control and regulation of letting agencies in this Bill, I defy any Minister to have the confidence to believe that there will be another opportunity in the next decade; when the matter is discussed before the relevant Queen's Speech, they will always be told, "Oh, you had your opportunity in 2007. You didn't put that in then so don't think you can have the parliamentary time to have it now". For that reason, I urge the Minister, even at this late stage—notwithstanding the fact that he appears to have the support of the Conservative Front Bench—to listen to the wise words of the noble Earl and to accept his amendment.

Lord Truscott: My Lords, the noble Earl, Lord Caithness, will recall that on Report I undertook to consider this matter further. I have now reviewed the arguments, but have concluded that this course is not possible under this Bill. I have written to the noble Earl, Lord Caithness, to explain the reasons for that.
	As that letter explains, the aim of the Bill is to implement the recommendations in the OFT report on the estate agency market in England and Wales. It was never our intention comprehensively to overhaul the 1979 Act. The OFT report did not consider the case for extending the 1979 Act to include lettings and property management. Consequently, the Government do not have the required evidence base to extend the Act in that way. In addition, there has been no consultation with industry about this proposal, in line with normal government practice.
	Furthermore, amending the definition of estate agency work in Section 1 of the 1979 Act would require careful consideration to ensure that the policy objectives were achieved and all the necessary consequential changes were made, and to check for any unintended consequences. Even if all the necessary research and consultation had been done, it would not be possible to undertake this detailed and time-intensive work at this point in the Bill's passage.
	In response to points made by the noble Lords, Lord Lee of Trafford and Lord Razzall, and the noble Earl, Lord Caithness, I can assure noble Lords that the Government will continue to monitor the private-rented sector and the property sector more generally, including direct sales by property developers, to determine whether there is market failure. At some point there may be a need for new legislation in the property sector. I do not share the view of the noble Lord, Lord Razzall, that we cannot come back to this issue, as I pray and hope that our Government will be in power for a long time and we will have many opportunities to revisit the subject. Nevertheless, it is right that these matters are considered on the basis of proper evidence and consultation.
	I hope that the noble Earl, Lord Caithness, will understand that the Government have gone as far as they can to meet his concerns. I reassure him that the Government will continue to keep a close eye on the issues that he and other noble Lords have raised in the debate today.

The Earl of Caithness: My Lords, the Minister said that he hoped that I would appreciate that the Government have gone as far as they can to meet my concerns. I do not think that the Government have gone anywhere to meet my concerns. They have stayed absolutely still. They have put up the usual brick wall. They have the usual word at the top of the brief for the Minister on the amendment: "Resist". I remember it well; I lived with it for 10 years.
	The Government, not we, instructed the OFT. The fact that they got their instructions wrong and, as a result, got a lousy report that did not cover another important part of the industry is not our concern. It is time that the Government put that fault behind them and remedied it. Here is a good chance to do so. I do not accept what the Minister says: that it is impossible to do all the necessary work at this stage of the Bill. I used exactly the same arguments on Bills that I was trying to take through your Lordships' House. When I was defeated, it was remarkable how quickly those problems disappeared. The Bill might have been held up for a short period, but within the legislative Session the Bill was passed as amended.
	I agree with the noble Lord, Lord Razzall, whom I thank for his support, and the noble Lord, Lord Lee, that it is very difficult to get legislation. There is no way that the Government would introduce a Bill solely to regulate the letting agents. That would have to be part of a bigger Bill; the DTI would have to dress it up and include it as Part 8 of a wider Bill. The chances of that are very small, so I think that we ought to test the opinion of the House.

On Question, Whether the said amendment (No. 6) shall be agreed to?
	Their Lordships divided: Contents, 85; Not-Contents, 145.

Resolved in the negative, and amendment disagreed to accordingly.
	Schedule 6 [Estate Agents' Redress Schemes]:

Lord Dubs: moved Amendment No. 7:
	Schedule 6 , page 68, line 25, leave out "£500" and insert "£1,000"

Lord Dubs: My Lords, Amendment No. 7 would raise the penalty on an estate agent from £500 to £1,000. This was discussed in Grand Committee and again on Report, when an amendment was tabled to increase the penalty. I understand that there would be difficulties with the higher amount because it is normal practice to go before the courts to increase the penalty. However, given the sums of money at stake for estate agents and the profit that they can make on a single transaction, it seems reasonable to say that £500 is too small a penalty to deter anyone. I do not say that a £1,000 penalty will act as a major deterrent either, but it is better than £500. The Minister made sympathetic noises when we discussed this on Report, so I hope that the arguments are well understood; there should be no difficulty about them. My only concern is whether a £1,000 penalty will have more of a deterrent effect than a £500 one, but it is a little better. I beg to move.

Lord Lee of Trafford: My Lords, I support the noble Lord, Lord Dubs, on Amendment No. 7. Previously, we moved an amendment to increase the penalty from £500 to £3,000, which would be considerably nearer the average one-off commission apparently earned by estate agents and similar for each transaction. We would obviously prefer a £3,000 fine; nevertheless, if the noble Lord, Lord Dubs, has achieved any advance on £500, at least he has made progress. We support him in that endeavour.

The Earl of Caithness: My Lords, I, too, support the noble Lord, Lord Dubs, whom I supported at an earlier stage. He has made a little more progress than I have. I fear that even my noble friend on the Front Bench will continue to sit on her hands, so from this side we are very supportive of the noble Lord, Lord Dubs.

Lord Truscott: My Lords, Amendment No. 7, tabled by my noble friend Lord Dubs, seeks to increase the maximum amount of a penalty charge notice from £500 to £1,000 and is supported by the noble Lord, Lord Lee of Trafford, and the noble Earl, Lord Caithness. The Government have listened carefully to the arguments made in Grand Committee, on Report and today. As I said on Report, the objective is to find a sensible balance between the rights of estate agents not to be given a large fine without any due process and ensuring that the penalty charge is not an insignificant amount. Given the views expressed, we believe that setting the maximum level of the fine at £1,000 is a sensible compromise. Although the actual level will be set by regulations, a maximum of £1,000 will allow some headroom to increase the fine over time, therefore future-proofing the legislation. I thank noble Lords for their contributions and I am content to accept the amendment proposed by my noble friend Lord Dubs.

Lord Dubs: My Lords, I am grateful to my noble friend. I am delighted.

On Question, amendment agreed to.
	An amendment (privilege) made.

Lord Truscott: My Lords, I beg to move that this Bill do now pass.
	Moved accordingly, and, on Question, Bill passed, and sent to the Commons.

Legal Services Bill [HL]

Baroness Ashton of Upholland: My Lords, on behalf of my noble and learned friend Lord Falconer of Thoroton I beg to move that the House do now again resolve itself into Committee on this Bill.

Moved accordingly, and, on Question, Motion agreed to.
	House in Committee accordingly.
	[The CHAIRMAN OF COMMITTEES (Lord Brabazon of Tara) in the Chair.]
	Clause 71 ["Licensable body"]:

Lord Kingsland: moved Amendment No. 108ZA:
	Clause 71, page 40, line 38, at end insert—
	"( ) A body is not a "licensable body" if it is regulated under section 9(A) of the Administration of Justice Act 1985 (c. 61)."

Lord Kingsland: The aim of this amendment, together with Amendments Nos. 150A, 150B and 150C, is to enable legal disciplinary practices, that do not have external ownership, do not seek to provide multidisciplinary services and offer only the services that an ordinary firm of solicitors can provide, to be regulated under the Law Society's mainstream regulatory amendments. We emphasise that even if these amendments were accepted, multidisciplinary practices and firms in which there was external capital investment would still be regulated under Part 5; that is, under those provisions which deal with alternative business structures.
	These amendments develop the approach of those discussed right at the end of the third day of Committee: to permit those who play a significant part in running a firm, such as the finance director, to be recognised with the status of a partner even though they are not qualified lawyers. Under the Bill, it will be possible to make non-lawyers partners in solicitors' firms, but the price of doing so is that those firms will be regulated under Part 5. In our submission, that is bound to cause a substantial but unnecessary regulatory burden.
	Sir David Clementi's report identified the additional challenges for regulation that would arise from either external ownership or the provision of multidisciplinary services, and we have no argument with that. But in dealing exclusively with practices that have neither of these characteristics, Sir David makes no sharp distinction between firms all of whose partners are solicitors and those with some legally qualified partners and some who are non-lawyers. In his report he said:
	"Legal disciplinary practices (LDPs) are law practices which permit lawyers from different professional bodies, for example solicitors and barristers, to work together on an equal footing to provide legal services to third parties. They may permit others ... to be Managers, but these others are there to enhance the services of the law practice, not to provide other services to the public".
	Sir David concluded that the majority of the partners should be lawyers. These amendments, therefore, are designed to secure precisely that. The Law Society would establish a register for permitted non-lawyer partners and set requirements for eligibility on the register. The requirements would include a character and suitability test so that individuals who could not, by virtue of previous misconduct, become solicitors would not be permitted to become non-lawyer partners. Moreover, potential partners would have to demonstrate familiarity with the Law Society's principles of professional conduct, as all managers and partners of a firm share a responsibility for ensuring that the firm complies with its regulatory responsibilities. In our view, this would respond to the hesitations expressed by the Minister at a rather late hour. There is no reason to assume that the Law Society's regulations would be any less rigorous than those under Part 5.
	This approach is wholly consistent with our view, shared by Sir David Clementi, that the ABS arrangements should be introduced incrementally. These follow on from the previous set of amendments. In our submission, they contain the necessary guarantees that the Government are seeking and ought to be accepted. I beg to move.

Lord Hunt of Wirral: I strongly agree with my noble friend. This subject exercised the Joint Committee on the draft Legal Services Bill. In our report, at paragraph 291 on page 84, we urged the Government to use less haste and more care, and on page 85 we referred to table 5 and the staging of the introduction of ABS firms. My noble friend's amendment would comply with stage one, which we described as LDPs involving existing recognised bodies. That, of course, falls very neatly with what my noble friend has said.
	I declare an interest as a partner in a national commercial firm of solicitors, Beachcroft LLP. I am a subscriber to the Gazette, whose front page features a very attractive picture of the noble and learned Lord the Lord Chancellor, Lord Falconer, with his mouth wide open, saying:
	"LDPs to be set up in mid-2007".
	That has come as very good news to everyone. The article stated:
	"Lord Falconer said legal disciplinary partnerships (LDPs)—with no non-lawyer managers or owners—will not be alternative business structures (ABSs) envisaged by the legislation and so need not wait for the legal services board (LSB) and the ABS licensing system to be set up. Instead, LDPs will be available once the Act is enacted, which could be in summer 2007".
	The article continued:
	"Lord Falconer said 'the fact that we are allowing [LDPs] to emerge in advance of alternative business structures answers a key recommendation' from the joint parliamentary committee which examined the draft Bill".
	Three cheers for that. We heard that at Second Reading and we now want to hear what the Minister proposes. This amendment gives her the opportunity to put LDPs into action straight away. In many firms a comparatively small number of people who deserve to become partners are not at present permitted to do so. The Law Society has well known procedures; in fact, it refers to the operation of legal disciplinary practices as "legal practice plus". The society has been involved in this type of regulation for a number of years.
	So, step by step, can we please entice the Minister to say, "Yes, I accept these amendments"?

Baroness Ashton of Upholland: The noble Lord, Lord Hunt, loves to entice me to do things. I try very hard, as he knows, to resist his enticements, though occasionally I succumb. I do not plan to succumb today on this amendment, but I shall say a little about the approach I have sought to adopt in this part of the Bill.
	One of the critical concerns when considering regulation and how to make alternative business structures work has been consistency. Consistency is very important in how Part 5 will work. I had the privilege of meeting the trademark attorneys yesterday and talking to them about their concerns regarding some organisations.
	I do not dispute for a minute that there are different types of alternative business structure firms, and that some will involve lower or higher risks. We have already had some conversations on the third day in Committee, and no doubt we will have more today, about those issues. However, I do not accept the principle that, even where a majority of lawyers control the firm, there is less influence or less potential for influence from non-lawyers. Noble Lords will know that, in the legal profession as much as elsewhere, even one individual can have a huge impact on any kind of company.
	In the financial services market, control beyond 10 per cent is treated as significant. I do not see why we have to consider legal firms differently in that context. In Part 5 we have provided that any person or body who controls 10 per cent or more has to be individually approved by the licensing authority. We have given flexibility to low-risk bodies—those whose total control by non-lawyers is less than 10 per cent—but we do not exempt them from the regulations in Part 5.
	It is also important to remind ourselves that in Part 5, whatever the level of influence or control of non-lawyer managers or owners, they can personally be held liable for breaches of professional rules. They are accountable to regulators in the same way as lawyers and, equally, may be disciplined for misconduct. That is an important safeguard in the context of some of the concerns raised in your Lordships' House and beyond.
	Above all, we want to ensure consistency—the classic "level playing field"—and appropriate regulation, hence the "low risk" status of companies whose total control by non-lawyers is less than 10 per cent and a clear regulatory framework for those whose non-lawyer control is above 10 per cent. As I recall saying during the passage of the Compensation Act, regulation need not be heavy-handed or seen in a negative way. Quite the opposite; this is a very positive measure, which we hope organisations will embrace. I accept that we need to think carefully about how regulation works and ensure that firms feel able to participate in ensuring its effectiveness. The Law Society and others will be critical players in that, but I do not accept that we should make exemptions or have differences in how it is done. That is not to say that I do not think that the Law Society would make good rules, I hasten to add.

Lord Hunt of Wirral: I am listening with great interest to the Minister. These amendments would still mean that these firms would be regulated. I pay tribute to the Minister for her work in bringing forward the Compensation Act 2006; her light touch is legendary. But given that we have the Law Society with its existing regulatory requirements, why cannot we allow LDPs to continue under that particular regulator and regulatory regime rather than wait for a much more onerous and difficult-to-understand regime, which no doubt we shall discuss under later amendments?

Baroness Ashton of Upholland: It is not onerous and difficult to understand—far from it. I am grateful for the noble Lord's comments about my light touch. We have talked a lot about the partnership between the front-line regulators and the Legal Services Board; we have had some very interesting and satisfactory debates about how that might work. It is important that we continue with that theme, but we are not minded to have different sets of regulatory framework. It is much better to be consistent. With no discredit at all to the work of the Law Society or its abilities in this regard, we believe that it is better to do this as we have set it out in the Bill, to be clear about the role that Part 5 plays and to be clear with all those involved in alternative business structures about their responsibilities and their liabilities. But we hope that we will allay some of those concerns in the way in which the system is set up and taken forward—and I am sure that we shall return to that particular point at length and between stages of the Bill.

Lord Kingsland: I am of course most grateful to the Minister for her reply. I can only conclude from her responses that she disagrees with the judgment of Sir David Clementi—and I must say that I share the surprise of my noble friend Lord Hunt of Wirral.
	The provisions under Part 5 will not come into effect for some considerable time; by contrast, once this Bill gains Royal Assent, it will be possible to start immediately with legal disciplinary practices under the aegis of regulation by the Law Society. There is no reason why the Government should not look very carefully at the system of regulation applied by the Law Society to see whether it meets the kind of criteria that they would like to see met under Part 5 generally. The Government would have three years to make this assessment.
	Given that we all seemed to agree during the previous day in Committee that an incremental approach to alternative business structures was highly desirable, here is a golden opportunity for the Government to put that philosophy into practice. Where is the danger? The Minister can always intervene and say to the Law Society that its regulatory system is not up to scratch and that they want something tougher and more penetrating. But it would provide the Government with a marvellous opportunity for a dry run for what they hope to achieve in future with the provision of external finance and multidisciplinary practices.
	The Minister is nodding but demonstrating no inclination to rise again to her feet.

Baroness Ashton of Upholland: I am always happy to rise to my feet, but I did not want to interrupt the noble Lord.
	I do not see anything in the Bill being at odds with what Sir David Clementi said. As I understand it, he said that we need to have certain safeguards for all types of alternative business structures. Those are built into the approach we have taken. We think that it is better to have the consistency of regulation; it is just a different point of view.
	I was nodding as I was thinking of our desire to approach noble Lords' concerns about alternative business structures with an open mind on how they develop and with a recognition that we shall take time to get this right, which is important. The noble Lord, Lord Kingsland, has some interesting ideas on other things that we might consider in that regard when we discuss later amendments. I was nodding at all that, but I believe that the way we have set out the measure is better and reflects a consistent approach. I say that with no disrespect to the Law Society.

Lord Kingsland: In the light of what the noble Baroness has said, I do not think that I can take this amendment much further today. Therefore, with a degree of regret, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 71 agreed to.

Lord Kingsland: moved Amendment No. 108A:
	After Clause 71 , insert the following new Clause—
	"Patent and Trade Mark Agents
	A body—
	(a) existing at the date this Act comes into force and entitled to use the description "Registered Trade Mark Agents" or "Registered Patent Agents"; and (b) which through the operation of section 71(1)(b) of this Act would otherwise be a licensable body,
	shall not be a licensable body unless it ceases to be entitled to use the said descriptions."

Lord Kingsland: This is another amendment which comes from the patent and trade mark agents. I was delighted to hear from the noble Baroness that she has met representatives of the trade mark and the patent bodies, as, indeed, she undertook to do on the previous Committee day. I am extremely grateful to her for taking that trouble.
	This amendment relates to the ownership qualification for a licensable body, as set out in Clause 71(1)(b). It arises specifically out of the unusual position in which the patent and trade mark agents find themselves in comparison with other approved regulators. Patent and trade mark attorneys have never been restricted as to their ownership. As I understand it, a number of firms—at least one major firm and several smaller ones—have external owners, and have done so for a long time. I should emphasise that this situation is perfectly legal.
	As far as I can discern, there has never been any suggestion of a risk to a consumer, nor indeed any risk of conflict of interest. To us it seems inequitable to regulate a business practice that has so far been perfectly legal and where no risks have been identified. If the Bill is passed as it stands, this would cause considerable cost and, indeed, disruption both to existing firms and to the regulatory authorities themselves, who would be compelled to become a licensing body for their members. I beg to move.

Baroness Ashton of Upholland: I am grateful to the noble Lord for his remarks about the meeting that I had yesterday with both organisations. It was a very good meeting. I plan to correspond with them and to put copies of the correspondence in your Lordships' House. There were misunderstandings on a number of issues that I was very pleased to clear up and which I shall set down in writing. We discussed the issue that the noble Lord has brought forward in this amendment.
	I do not think that it will come as any surprise that I shall not accept the amendment but I am mindful of three points which I discussed with the organisations yesterday and which are worth commenting on. The first concerns the issue that I believe we have already touched on; that is, making sure that regulation is simple and straightforward to enable the firms which, as the noble Lord rightly says, are perfectly legal and are doing a fine job, to be regulated without feeling that it is a burdensome or additional pressure.
	The second issue that we discussed was cost. We will continue to talk about our desire to make sure that it is not in any way a prohibitive feature of what we put in place. The Bill is deliberately flexible to allow that. The third issue that they were concerned about was the transitional time. Again, I am very keen to hear their thoughts and views on what that might be, so that we can have a discussion on how to approach that. I am not minded to allow an exemption, not surprisingly, because the way in which the amendment works would mean that it would be a widespread exemption. I know what the noble Lord is seeking to achieve. We know that a number of the firms concerned would, under Clause 106, fit in the low-risk, 10 per cent status. Those will have rules modified to suit the lower risk that they present. As I have indicated, we are in discussion with them about their concerns about how it would work in practice.
	I am not minded to exempt, but I am very clear that we want to make sure that this works effectively for them, that it is not burdensome, that we deal with issues of cost, and that the transitional period is appropriate. I hope that we will be able to allay their fears in that way, which may get us not quite to the same point, but at least to the point where they will be content.

Lord Kingsland: I am most grateful to the noble Baroness for her reply. I am disappointed that she is not prepared to accept my amendment, but I gain some solace from what she said about a transition period. Much will depend on the length of that transition period. For that to be a satisfactory alternative to what is proposed in the amendment, it would need to be, as the Americans say, a meaningful length of time and not something that is merely derisory. I gain a certain amount of optimism from observing the noble Baroness nodding. Therefore, I make haste to beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clauses 72 to 80 agreed to.
	Clause 81 [Licensing rules]:

Lord Kingsland: moved Amendment No. 108AA:
	Clause 81 , page 47, line 3, leave out subsection (1)

Lord Kingsland: This amendment would remove the obligation on the Legal Services Board to make rules in its capacity as a licensing authority. The principle in the Bill for the regulation of alternative business structures is that front-line regulation should be carried out by the approved regulators once they have received authorisation to act as a licensing authority. I emphasise that only approved regulators can seek to become licensing authorities; it would not be open to any other regulatory body to fulfil that role.
	The principle that only approved regulators can seek to become licensing authorities in itself provides an important protection. It is right that the same consumer protections are in place in respect of alternative business structures as apply to ordinary law firms. It is also right to ensure a level playing field, so that the regulatory requirements applying to alternative business structures are equivalent to those that apply to ordinary law firms.
	That is best achieved, we submit, by ensuring that, as the Bill clearly intends, the same regulators are responsible both for ordinary law firms and for alternative business structures. However, that principle is undermined by the provisions that would enable the Legal Services Board itself to act as a licensing authority. It is understandable that there should be a power for the Legal Services Board to act as a licensing authority in an emergency. For example, it may be necessary for a variety of reasons to cancel the designation of an approved authority. In that case, to avoid a licensing vacuum, the Legal Services Board would have to step in; but it would be wholly inappropriate for the board to act as a licensor in the absence of an emergency of that type.

Lord Clinton-Davis: I am much obliged to the noble Lord for giving way. If you have to define an emergency, are you not opening up the situation? How do you define an emergency? It is very difficult to achieve. It would be much better, as the Bill proposes, to have a direct and simple way of achieving it. The noble Lord is adding complexity to a situation which should not be there.

Lord Kingsland: I am most grateful to the noble Lord, who makes a good point; but the Bill does set out the circumstances in which an emergency can arise and how the Legal Services Board should act. The philosophy that lies behind the amendment, and many other amendments that the Opposition, other noble Lords and noble and learned Lords have tabled, is to make it clear that the task of the Legal Services Board is supervisory—that it should step in only if one or other of the approved regulators falters. All the amendment seeks to do is to ensure that in normal circumstances the approved regulators are the licensors and that the power of the Legal Services Board is narrowed so as to take that power on to its shoulders only when an approved regulator is clearly delinquent.
	The noble Lord's point is still valid because the question of whether something is an emergency must, in the end, allow for a degree of discretion. It may well be, in the light of the noble Lord's intervention, that I shall have to look again at that aspect of Part 5; but my point is to ensure that the Legal Services Board is not able to trespass into an area which is rightly that of the approved regulator. I am most grateful to the noble Lord for his intervention.
	The argument has been advanced that provisions of this sort would be necessary if the approved regulators were unwilling to become licensing authorities; but that is not a sustainable argument. Why should an approved regulator be unwilling to become a licensing authority or to license a particular form of alternative business structure unless it considers that such a licence could not safely be granted—bearing in mind that it would have to act in accordance with regulatory objectives? Given all of the approved regulator's experience of regulating different sorts of law firm, if it feels that it cannot safely regulate a proposed form of alternative business structure, it would be foolish for it to be directed to do so.
	In the past, there may have been a concern that the professional bodies would decline to permit alternative business structure firms to operate—not on regulatory grounds, but out of a wish to protect their members from competition. However, that argument no longer applies, if, indeed, it ever did. The Law Society, for example, made it clear that, provided the necessary consumer protections are in place, it has no objection whatever to the provision of alternative business structures.
	I suggest that your Lordships also bear in mind that the Bill ensures that, in future, decision-making on regulatory issues will be independent of any representational role which an approved regulator may have. So there is no risk of approved regulators' decisions about alternative business structures being taken on protectionist grounds. I beg to move.

Lord Campbell of Alloway: I apologise for having been unable to be here earlier. I have very little to say but this is an important amendment. Whether it is in the right form is not the point; put simply, the issue to which we have returned, is: should the LSB intervene unless there is reasonable cause to do so? We look at this matter in different ways and it is expressed in different ways in the form of some amendment. It was said in another way today, but the drafting is not terribly important; it is the principle to do that for which I contend.

Lord Mackay of Clashfern: I am having a little difficulty in understanding Clause 81. Perhaps I can explain my difficulties so that the noble Baroness can set them at rest. The first line of the clause states:
	"The Board (acting in its capacity as a licensing authority)".
	According to the ordinary rules of grammar, you would think that that would apply to the rest of the provision but that is not the case. Subsection (1)(b) says that the board,
	"may make or modify its licensing rules only with the approval of the Board (acting otherwise than in its capacity as a licensing authority or as an approved regulator)".
	So far as I understand the provisions—that may be quite a restriction—the board acting as a licensing authority is the same as the board acting not as a licensing authority in its construction. Therefore, the board has to make the rules acting, under subsection (1)(a), in its capacity as a licensing authority and approve those same rules not acting in its capacity as a licensing authority. That seems a somewhat unnecessary complication. How it is supposed to add to the business, I do not know.
	Assuming that one gets over these slight grammatical difficulties, do the rules that the board makes in its capacity as a licensing authority apply to other licensing authorities? Clause 81(3) states:
	"Licensing rules of a licensing authority are rules as to".
	Therefore, for example, in so far as the Law Society might be a licensing authority, its licensing rules are not the rules of the board, so to whom do the board's licensing rules apply, particularly if they are not intended to apply generally but simply in some kind of overarching emergency? I find this whole provision a little difficult but I have no doubt that the noble Baroness will be able to explain it in a way that even I will be able to understand.

Lord Hunt of Wirral: While we all enjoyed the spectre of the ship of state of government being holed below the water-line by my noble and learned friend Lord Mackay of Clashfern, and as no doubt some degree of repair is about to be carried out, I just think that the answer is to leave out subsection (1), which is exactly what the amendment seeks to do. Only approved regulators can seek to become licensing authorities. Surely that is the main point, as well as being the main point behind the amendment. Why are we putting this obligation on the board, acting in whatever capacity, to make licensing rules, which it has to do before the end of 12 months?
	I agree with my noble and learned friend Lord Mackay of Clashfern that it is difficult to understand how this will operate and to whom these rules will apply. Although I recognise the validity of the point made by the noble Lord, Lord Clinton-Davis, we are trying to introduce a simple regime. Provided we still stick to the principle that only approved regulators can seek to become licensing authorities—for example, the Financial Services Authority cannot apply to become a licensing authority—why do we need this additional obligation on the board, particularly when we cannot work out to whom the rules will apply? I and my noble friend, who served so valiantly on the Joint Committee, are anxious to ensure that it is as easy to understand as possible. We have a dilemma, particularly if the Minister runs true to form and rejects this amendment as well. Surely, the answer is for her to accept it.

Baroness Ashton of Upholland: I am afraid I am running true to form for the time being. It is not that I feel holed below the water-line but perhaps I need to resolve a little drip. I say to the noble and learned Lord, Lord Mackay, that I am not so foolish as to try to do other than to listen very carefully to what he says about the drafting of the clause. I shall look at the drafting, which is important. I am grateful to him because if he finds the drafting difficult, it is worth looking at it again to ensure that it is as clear as possible.
	On the licensing rules applying to others, they apply only to bodies that authorise the licences and the Legal Services Board rules apply only to bodies that it licenses and not to other licensing authorities. I am not sure whether that makes it any clearer and I shall try to give him further details. I am certainly happy to look at the issues that he has raised.
	I have a lot of sympathy with the intentions behind the amendments so I want to set out how we have dealt with the concerns raised. I completely take the point that one of the themes running through the Committee stage of the Bill is ensuring that the supervisory role of the LSB—the noble Lords, Lord Kingsland and Lord Hunt, certainly referred to this—is important and that the board intervenes only where it needs to. I accept that. Earlier today and on other Committee days we have spoken about the partnership approach. We think we have set this out to prevent the board acting prematurely as a licensing authority.
	Schedule 12 is important in that context. We have three sets of circumstances in which bodies can approach the board for licences: first, where there are no competent licensing authorities for the service that a body wants to provide and none is applying to be designated, so there is a gap in the market, if I can put it that way; secondly, where there are competent authorities, but they have determined that they do not have suitable regulatory arrangements, and none is planning to make such arrangements; and, thirdly, where there are non-commercial bodies, such as not-for-profit bodies, where licensing authorities have suitable arrangements but none is offering terms that are appropriate for those bodies. In addition, the board is not obliged to grant licences when any of those conditions are met. It still has to consider the merits and it may turn down the body.
	I completely accept the need to deal with the concern that the board should not be able to license bodies where other licensing authorities have said that they do not consider they can do so safely. There are two different interpretations of what we might mean by "safe" or "unsafe" in this context. It may be that for individual bodies rejection generally does not allow them to approach the board. Schedule 12 is constructed to avoid that. It applies only where the general circumstances do not allow bodies to be licensed—not where bodies have had unfavourable decisions. The only exception is non-commercial bodies, such as not-for-profit agencies, for which special provision is made in order to maintain the health of the not-for-profit sector.
	The other meaning one could put on this is that licensing authorities do not feel able or competent to license and regulate those bodies because of how they are structured. That is covered by the second ground in Schedule 12; it is what "suitable regulatory arrangements" means, although it may also be that licensing authorities want to build up experience in more unusual forms of alternative business structure firms. They may not have suitable arrangements for two broad reasons; the authorities may not have prepared licensing rules for the services in question, either because they are not an authority's intended market or because they are unfamiliar; or they may be a combination of services that authorities feel cannot be safely licensed.
	The intention behind the amendment is that the board should not be able to license bodies either. It sounds fine in principle, but licensing authorities will be experts and if, having considered the situation, they conclude that licensing is not safe, I would expect the board to respect that. I remind the Committee again that the board is not obliged to issue licences. It may not have suitable licensing rules and may conclude that none can be devised. It is important to consider the possibility that licensing authorities have not created regulatory arrangements for a full range of services. I have indicated that it is particularly important for providers such as not-for-profit bodies. It is unlikely that they would not be catered for, but we must ensure within the Bill that we have thought of the possibility that that could happen.
	We agree with the thrust of wanting the board to step in only as a last resort, and Schedule 12 is designed for that purpose. I hope that, on reflection, the noble Lord will agree that we have got that right and will feel able to withdraw the amendment.

Lord Kingsland: I am grateful to the Minister for setting out her philosophy, which I find partially reassuring. The difficulty is that, in our judgment, it is not set out in the Bill in a way guaranteeing that, once these provisions are in operation, the Legal Services Board will exercise a degree of self-restraint consistent with what the noble Baroness has said. That is the issue.
	The Minister did not go on to follow the logic of the principle she adumbrated to the Committee by saying that she would amend the Bill to make it absolutely clear that that is the situation. That is what we wanted to hear from her.

Baroness Ashton of Upholland: As with all amendments, I will, of course, reflect on it. We think that we have captured it within Schedule 12, which is why I wanted to put our approach on the record; there is a lot of agreement on principle between us. I am always happy to look again to ensure that we have captured it; I have already undertaken to look at whether the grammar works as I hope it will.

Lord Kingsland: I thank the Minister for agreeing to look at the matter further. Irrespective of her reaction to what other noble Lords have said, I suggest that the particular points of my noble and learned friend Lord Mackay merit her urgent consideration. Meanwhile, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendment No. 108B not moved.]

Lord Kingsland: moved Amendment No. 108C:
	Clause 81 , page 47, line 25, at end insert—
	"( ) appropriate provision requiring the licensing authority to consider the likely impact of a proposed application on access to justice when determining the application,"

Lord Kingsland: The amendment raises an issue rightly debated at considerable length during the clause stand part debate initiated by the noble Lords, Lord Thomas of Gresford and Lord Maclennan of Rogart. It concerns the desirability of having a specific access to justice provision in Part 5. Clause 1(1) contains an access to justice provision as one of the seven objectives that the Legal Services Board and other authorities designated under the Bill have to take into account. However, it is only one of seven; and in the balancing exercise by a regulatory authority, it might not carry the weight that we believe it ought to carry when designing an alternative business structure under Part 5.
	I apologise to noble Lords for rehearsing some of the arguments that have already been raised; but this amendment inserts a specific access to justice requirement at page 47, line 25. It makes clear that, in itself, access to justice should be a crucial component in the design of any alternative business structure. I make no apologies for quoting the Law Society's response to the Government's consultation paper In the Public Interest:
	"New entrants into the market may bring about some benefits. However, there is a risk that there may be long-term structural effects that destroy service provision and the fabric of small communities. Put bluntly, new entrants might cherry pick more profitable and less complex areas of work, driving down the profitability of established local firms who offer a full range of services at the heart of their communities. If that happened, where would consumers go for advice on complex matters?
	The Law Society's conclusion is that whilst the regulatory issues concerning new service providers can be dealt with ... there are very serious risks to access to justice from the uncontrolled admission of new entrants. Existing practitioners report that in many areas, a number of existing firms serving small localities would be in jeopardy if large institutions entered the market for legal services. We believe that the Government needs to carry out much greater research into the likely impact of liberalisation before taking ... decisions on the way forward".
	The Joint Committee of both Houses that examined the draft Bill under the chairmanship of my noble friend Lord Hunt of Wirral also drew attention to this issue. It stated that it was,
	"persuaded by some of the evidence suggesting that some of the reforms may reduce geographical availability. We consider that ABSs may reduce the number of access points for legal services and we see this as a potential problem. There is clearly an issue here and the only conclusion we are able to draw is that we cannot be sure how it will work out. We recognise that there may be a trade-off between the quality and accessibility of advice—for example, a small, high street solicitor in a rural area may not be able to provide the specialist advice a client requires. We recommend that the Government amends the draft Bill to ensure that the impact of ABSs on access to justice, particularly in rural areas, informs the decision-making process for licensing an ABS firm".
	Our amendment does not assume that the consideration of the impact on access to justice would be fatal to an application for a licence; it is simply intended to ensure that the licensing authority considers that aspect when an issue seems likely to arise and gives it full weight in determining its application. I beg to move.

Baroness Carnegy of Lour: This Bill applies largely to England and Wales, but it is possible that a firm could have a branch in, say, Scotland or another jurisdiction, even in Europe. Access to justice could therefore be affected in a local area in Scotland. Is that possible? It would be very interesting to know that.

Lord Lyell of Markyate: I support my noble friend's amendment. I invite the noble Baroness to explain fully—as she always does—government thinking on this important matter and to consider teasing out a little further between now and Third Reading whether we have this right. The idea of alternative business structures coming in could well be beneficial. The liberalisation of the conveyancing market some years ago was generally beneficial and did not—at least it was not my impression—cut down access to other forms of justice and services; in fact the whole market became a good deal more liberalised.
	On the other hand, there is a genuine risk here that large businesses coming in looking for volume may cream off some of the more standard work and consequently remove the legitimate earning power of those who provide a wider service. The amendment concerns that aspect. I have racked my brains to provide a specific example; I do not think that we are in specific-example country here. It is a question of whether there will be enough small to medium-sized genuine firms of solicitors providing a good general service to those who literally need access to justice, as opposed to needing the more mass-produced services that can be provided. I much look forward to hearing what the noble Baroness has to say.

Lord Neill of Bladen: I too support the amendment. Your Lordships may recall that I was a member of the Joint Committee serving under the noble Lord, Lord Hunt. One aspect in the evidence that worried us a lot was that the provision of legal services in a new way and by new entrants, as it were, could damage existing firms.
	I was not able to be here on the last occasion we discussed this, but the noble Lord, Lord Thomas of Gresford, spoke about his experience and his knowledge of practice, particularly in Wales and no doubt elsewhere. He gives an account of some firms of solicitors working in quite beleaguered circumstances. In other words, there is a very narrow margin that keeps them going. I reached a conclusion on the committee that the Government had not been sufficiently concerned about the impact on local solicitors. I support this provision because it would require that consideration was specifically given to the threat to other practitioners in the area.

Lord Thomas of Gresford: I have already made the point in previous contributions, but I would like to underline it again. In a small solicitors' firm there are various types of practice and different partners take on different responsibilities. One part of the firm may make a lot of money and the other part may make a loss.
	Perhaps I may give one or two examples, as the noble and learned Lord, Lord Lyell, mentioned that he was unable to. Making a will is a loss-leader. There is not much profit to be made out of making wills. Wills are made and kept in the solicitor's office because probate can be a financially profitable business. In due course, the family come to the solicitor, the will is produced and, naturally, probate is undertaken by those solicitors.
	Conveyancing used to be a particularly profitable part of the work, especially when there were fixed fees. The noble and learned Lord, Lord Lyell, referred to liberalisation. Conveyancing bodies were set up that completely undercut that market. I am too far removed from practice to say whether conveyancing is as profitable today as it used to be.
	The Government are concerned about the consumer, so: "A cheaper conveyance, great. A free will, that is all right". But in fact, on the profitable sides of the business depended much of the community work that a solicitor did. He got and still gets his work by providing a community service, so that he is known in a locality; he is a friend of people and to families over a wide range of matters. Through that, the profitable and the unprofitable come together.
	Nothing in the Bill suggests that a large firm coming in—an insurance company, shall we say, the AA or a supermarket; the sort of institutions that we have been talking about—will be in the least interested in providing that comprehensive service. They are not interested in the community; they are not interested in getting work in through their connections, through building clients in the locality over years—the word of mouth from one client to another—and so on. That is not how big business operates. It operates on the market.
	I started my remarks on Second Reading by saying that the market has taken over and that perhaps that is not a good thing. It does not follow that it is in the public interest—that driving down cost to the client will produce a better service. If we put into the balance the fact that solicitors in small towns—such as the small town in which I practised—have to make a living and have a reasonable standard of living for all the qualifications that they have obtained and the money that they have invested to reach their position, the weakening of the community service that large organisations are likely to bring is undesirable.
	The amendment is to be wholeheartedly supported, because at least it proposes a consideration of the wider community in the authorising of ABS services. In parts of north and mid-Wales that I know well, if the supermarkets, which tend to dominate on the outskirts of towns, take over the profitable parts and leave the rest, that will be against the public interest. The public interest is a matter that the regulatory body must take into consideration when it comes to alternative business structures.

Lord Campbell of Alloway: I wholly support the amendment and, in particular, the reasons just given by the noble Lord, Lord Thomas of Gresford. It takes me back to my early days when I worked the western circuit. It is so long since I was in practice, but I cannot believe that those solicitors are not still there to serve their communities. They were small solicitors, highly efficient, but they had good work which enabled them to do the poorly paid work. It is very important that whoever deals with this should understand the practicalities as they have been extremely well put by the noble Lord, Lord Thomas of Gresford.

Lord Hunt of Wirral: This is such an important amendment that it is probably the most important one that we are discussing today. I am very grateful for the points that have been made by so many noble Lords already, but I recall that it was the noble and learned Lord, Lord Woolf, who warned that alternative business structures could have—I believe that I am quoting him correctly—"a devastating effect on access to justice". There was a sense of chill when he used the word "devastating", because those of us who support alternative business structures in no way want that to happen. We want very much the opposite; we want alternative business structures to extend the opportunities for the public to have access to the advice that they need. Several of my colleagues who have already spoken contributed very positively to that debate. In the Joint Committee, witness after witness expressed their concern that the ABS provisions may have an adverse impact on access to justice. The Master of the Rolls told us:
	"It is very difficult to see how this suggestion is going to improve access to justice for those who cannot really afford it because ... anybody who is going to invest money into it is going to be looking for a return, quite unsurprisingly".
	Since we had all that evidence, many of the bodies have continued to be in touch and say that they are still looking to the Government for some reassurance on access to justice. The Legal Aid Practitioners Group, which faces problems on a number of fronts, particularly since the Carter recommendations, highlights two areas that very much follow the points already made in this debate. Richard Miller, the director of that group, said:
	"As a representative body for legal aid firms and agencies, we are particularly concerned about the likely impact on the current range of services provided by high street solicitors. Commercial providers will be attracted by the areas that can be commoditised, computerised and provide a reliable margin of profit. These services often subsidise legal aid work, and without them high street firms may not be financially viable. ABSs will cherry-pick only the profitable work, such as conveyancing, wills and telephone helplines".
	The noble Lord, Lord Thomas of Gresford, has just made the same point. Richard Miller went on to quote from one of the contenders for alternative business structures who has actually said as much.
	Much more serious, however—I mention this particularly to the Minister—is the threat that claims farmers now have plans to own law firms. The Gazette of 4 January, which I quoted from a little earlier, highlighted a number of claims farmers who have already expressed an intention to do so. After the recent high-level collapses of the Accident Group and Claims Direct, both of which left many people worse off and caused losses to a whole range of individuals, this seems a highly undesirable development, and at the moment there is nothing in the Bill to stop it.
	I do not believe that the Government have ever responded adequately to the Joint Committee's concerns. As my noble friend has already pointed out, we in that committee highlighted the enormous concern that we all had about access to justice. In one of our recommendations, we said:
	"We consider that ABSs may reduce the number of access points for legal services ... There is clearly an issue here and the only conclusion we are able to draw is that no-one can be sure how it will work out".
	The Government need to rethink this area. I believe that my noble friend has given them an important amendment.
	The Minister may refer to the fact that one of the regulatory objectives, under Clause 1(1)(b), is "improving access to justice", which is good as far as it goes. My noble friend, under Clause 81, would make sure that there will always be adequate,
	"provision requiring the licensing authority to consider the likely impact of a proposed application on access to justice",
	right at the outset when the application is being determined. What could be more sensible than that? I am not sure that it will alleviate all the concerns, but it will go some considerable way towards doing so.

Lord Neill of Bladen: Perhaps the quotation that the noble Lord had in mind from my noble and learned friend Lord Woolf is:
	"There is no doubt that large businesses could provide legal services in a novel and interesting way. But that could—unintentionally, perhaps—have a devastating effect on those who have traditionally provided services in rural areas in particular. Great care has to be exercised to see that damage does not occur".—[Official Report, 23/1/07; col. 1057.]
	Is that the passage?

Lord Hunt of Wirral: Yes, it is.

Baroness Butler-Sloss: I underline and endorse what the two previous noble Lords had to say about rural areas, particularly what is said in paragraph 324 of the House of Commons and House of Lords report on the draft Legal Services Bill, to which the noble Lord, Lord Hunt, referred. I spend quite a lot of my time in the West Country, which is a rather less well off area of England where the absence of legal aid is hitting quite hard. The effect of the ABS firm may be quite dramatic in an area such as that. For the licensing authority to have the requirement of access for justice immediately in front of it, in that section of the Act, would be a very useful reminder. I strongly support this amendment.

Lord Carlile of Berriew: Perhaps I may, having served as a Member of Parliament for a rural area for a number of years, add my support to this amendment and, indeed, echo the words of my noble friend Lord Thomas of Gresford and others about the importance of having something like this amendment in statutory form to ensure that rural areas have proper legal services.
	My experience over 14 years as a Member of Parliament for a rural Welsh seat until 1997 included the observation of a contraction in the service provided by firms of solicitors. One reason for that contraction was the advent of franchising and similar arrangements in civil cases. I am not sure that this is right now, but until very recently only one solicitor in the whole of north Wales and mid-Wales was franchised to carry out litigation for claimants in clinical negligence cases. That made it very difficult for those of us who were trying to help people to obtain good-quality legal advice without travelling very large distances to do so. It became a significant problem. One of the effects of the Carter proposals will inevitably be a contraction in the number of firms carrying out criminal work, in particular in rural areas such as mid-Wales where the critical mass of work is small and cross-subsidies have always kept firms going.
	Another observation that I made during my years as a Member of the other place, which I understand is borne out today, is that large organisations, claims farming firms and others that are interested in doing work on a very large scale have no incentive to work in rural areas. It is extremely expensive for them to advise people in rural areas. The result for potential litigants is that the best that they can hope for is litigation through questionnaires and occasional telephone calls, which are often from people who are business oriented and not qualified to advise them on the legal issues concerned.
	There is a great deal of nervousness in rural areas—the situation in north Wales and mid-Wales is replicated in North Yorkshire, Cumbria and many rural parts of the country—about the effect of liberalisation of the market. One is not against liberalisation in itself, but some protection for rural areas is as justified in this sphere as in any other.

Baroness Carnegy of Lour: An average member of the public listening to this discussion might feel that it is about protecting the incomes of lawyers, as indeed it is. All noble Lords who have taken part are legally qualified, and when the Minister gets up to respond, she will be the first person after me who is not. We know that the public are a bit suspicious of the money that lawyers make, but, in an area with a relatively low population, people depend on competition between small legal firms. As a consumer of the law in such an area, I know that. Moreover, lawyers often compare notes about what is going to happen, who is going to do what and, I suspect, the fees that people will charge, although I do not know that.
	This may be a terrible thing to say, but the public depend on this kind of competition. If a large alternative business structure arrives in an area—one might even arrive in my area if there is a branch in Scotland—it might wreck the system. In simple terms, that is what many of the high-powered lawyers whom we are lucky to have in this House are saying. The Government should consider the amendment carefully, or at any rate its spirit, because we do not want access to justice through competition among lawyers in less populated areas to be wrecked by the Bill.

Baroness Ashton of Upholland: The odd thing about this debate is that I agree with much of what has been said, and I do not want to have a chilling effect. I am concerned to ensure that we allow only proper and appropriate organisations to be alternative business structures. I hear what the noble Lord, Lord Hunt, says about those who are galloping in that direction, and we will need to be clear about that. I agree, too, with the eloquent words of the noble Lord, Lord Thomas, in our discussion on the last occasion and, in part, in what he said today about rural issues, and with the words of the noble Lord, Lord Carlile. I accept what was said last time by the noble and learned Lord, Lord Woolf. Indeed, he and I have discussed his concerns, which I am sure the Committee would expect me to do. I accept, too, the observations made by the noble and learned Baroness.
	I am not a lawyer, but I now have an honorary law degree given to me by the noble Lord, Lord Rix, so that is something. However, there is very little between us. What we are arguing about is how best to express any concerns within the regulatory functions contained in the Bill. I have received a letter from Antony Townsend, chief executive of the Solicitors Regulation Authority, stating that,
	"the amendment is worthy of debate, but we would be concerned at one of the statutory regulatory objectives appearing to hold dominance over the others ... Access to justice is important and we would want to reflect that in a licensing scheme, but not in priority to other important regulatory objectives".
	I raise this only because it is important that other voices are heard in the debate. I am sure that Mr Townsend would be more than happy to talk to noble Lords further about his concerns.
	We need to remind ourselves first that we do make access to justice a critical feature of the regulatory framework. There is no difference between us on that. The negotiation concerns whether it should dominate over other factors. The difficulties, which I have sought to outline, are in making sure that there are no unintended consequences that might prevent the proposals from working as effectively as they might.
	I have mentioned before that the arrival of an alternative business structure would enable higher-quality and possibly less expensive legal services to be provided, but for various reasons a small element of what had been available before would have to be provided by the next village or town. If you have access to justice as the overriding feature, that structure might not come into being. This could be detrimental to a huge number of people when what was being proposed to tackle the issue for the remaining few people was quite satisfactory. We have to be careful that we do not accidentally create difficulties, which I think is what the Solicitors Regulation Authority is concerned about.
	We have made it clear that you can put conditions on allowing an alternative business structure to come into being. Those conditions could and would deal with some of the issues about which noble Lords are quite rightly concerned. For example, a firm of solicitors may be required to provide the kind of specialist services in a rural community that would be lost if they were allowed to disappear. It is quite possible for the licensing authority to be very clear and say, "Yes, you can have an alternative business structure but you must continue to provide these services", either because it is a straightforward access to justice issue or because it is a part of its overview of how best to provide services more generally. I do not disagree that we have to be careful and mindful to ensure that—in rural communities especially, but not exclusively so—these structures come into being properly.
	It is a fundamental principle that we provide opportunities for the legal world to expand, develop and grow, thereby providing opportunities for those who consume such services to obtain high-quality services—perhaps better services in some cases and services that were not available before in others. Access to justice is a very important factor within that. There is absolutely nothing between us. As I have said, I endorse all the comments that have been made about that. My difficulty is that there may be unintended problems if we say access to justice is the overarching objective. Between now and Report, perhaps the Solicitors Regulation Authority will raise its concerns with other noble Lords. It is the only difference between us, but it is a difference.
	As always, I shall reflect on what has been said, with an understanding that there is no difference between us in what we are trying to achieve but with the proviso that it should not have the consequences that have been raised in Committee today and on previous occasions. I am not accepting the amendment but I am very mindful that in making the system work we must ensure that it does not have the consequences that noble Lords fear.

Lord Mackay of Clashfern: Before the Minister sits down, her first argument was directed at the idea that it would be wrong to make access to justice an overarching principle. But this amendment does not do that; it only adds one particular consideration among others. It is an old device of an advocate who has nothing much to say to raise as their opponent's argument an argument that is easy to demolish. This is not an overarching provision; it is one factor to be considered among a number of factors. Indeed, from what she said, the Minister seems to agree that it is an important factor. It seems to me that her stance supports the amendment.

Lord Campbell of Alloway: My noble and learned friend has, in effect, taken a part of the point—and far better than I—that I was going to make: that is, the decision of the board must be a balanced decision. This point was argued by my noble friend Lord Kingsland on the previous occasion and the one before that. I am worried that no one knows or can foresee whether what will happen will be for the good or the bad, or whether or not it will appear to be within the balance of the regulatory obligations. What provision is made for representation to the board before it makes a decision? I cannot find that in the Bill.

Baroness Ashton of Upholland: In reply to the remarks of the noble and learned Lord, Lord Mackay of Clashfern, I was not trying to be disingenuous in what I was saying. The difficulty with the amendment as it is framed is that it would invite access to justice to be the priority above the other regulatory objectives. The noble and learned Lord may disagree with me, but I think that that would be a potential consequence. I would not try to use a false argument and I hope that the noble and learned Lord accepts that. I am not suggesting that we should not consider how we might reinforce the duties of the licensing authorities. I have no difficulty with that, either.

Baroness Butler-Sloss: I wonder whether the Minister might consider between now and Third Reading the possibility of the words "access to justice", but in a slightly different form.

Baroness Ashton of Upholland: I am not sure what a slightly different form of access to justice would be.

Baroness Butler-Sloss: I do not mean a different form of access to justice. I respectfully agree with the noble and learned Lord, Lord Mackay of Clashfern, that it did not seem at all to be an overarching phrase, but, if the Minister sees it as such, there are other ways of using the same words that would get what we are all asking for without necessarily offending the relevant government department.

Baroness Ashton of Upholland: I agree, and I accept that "overarching" was the wrong word for me to use. I meant that it would be a priority. I say to the noble and learned Baroness that—I hate to say this, because your Lordships know far more about legislation than I do, but I have done quite a lot of legislation thus far in my career—the minute one puts something on the face of legislation, one singles it out and it creates a circumstance where one could see it as a priority. That is all that I am seeking to say.
	I acknowledge what noble Lords wish to achieve. I understand completely the concerns that they have raised, for different reasons and from different experiences, and I have no difficulty with that. We do not wish to see unintended effects from alternative business structures that prevent people from getting access to justice, or indeed from getting the best from services that could be provided competitively, and so on. There is no difference between us on that.
	I am happy to consider reinforcing the language. My issue was that if you pick out one consideration, that might create some difficulties. As ever, though, the purpose of Committee is for me to listen and to take these issues and look at them with greater care. I emphasise again, and I hope that the Committee will accept, that there is nothing between us on what we are trying to do. The question is how best to achieve it. I will look at the wording with regard to what the licensing authority does, which may help us get to where we need to get to.

Lord Campbell of Alloway: On the question of how best to achieve it, would the Minister consider the problem that there is no means of representation to the board? How will the board make these decisions of great importance, which might work and might not? I would like some sort of undertaking, not a detailed commitment, that at least the question of representation to the board before a decision is made will be considered. That is all.

Baroness Ashton of Upholland: I will look at that. The noble Lord, Lord Campbell of Alloway, is right; it is important that the board is able to take account of that in its work. I will need to think about where that fits in with regard to legislation, good practice, rules or whatever, but I would expect there to be the opportunity for those who feel strongly in all directions to be able to put forward their views. With regard to the regulatory objectives, there would have to be the opportunity to look at that in the right and appropriate way.
	I am committed to making sure that this is reinforced. I apologise if I used the wrong word. It was not meant to imply anything. There is an issue of priority, though, which would be the effect of the amendment. We need to think about that carefully.

Baroness Carnegy of Lour: Will the Minister say whether the body might have a branch in an area other than England and Wales? The effect could be more widespread than that which we are discussing.

Baroness Ashton of Upholland: The minute I see the noble Baroness, Lady Carnegy of Lour, I always think: Scotland. Then I check whether I have information about it. The way that the alternative business structures will be established means that they will cover England and Wales only, so it is difficult to see how they could impact on access to justice in Scotland, other than on what can already happen. A firm could decide that it wished to put more resources into England, Wales or Scotland. That would happen as a matter of course. They are entitled to provide only the reserved legal services through entities that they establish in England and Wales. To provide services from Scotland they need to be authorised or permitted by the Law Society of Scotland or the Faculty of Advocates. So there is no direct impact on access to justice other than what would happen when any firm decided to do something for business reasons and changed how it worked.

Lord Maclennan of Rogart: The Minister has expressed complete understanding of what lies behind the amendment and, on earlier occasions, a recognition of the potential impact of establishing alternative business structures on legal services provision in rural areas. It appears that she is not at odds with the Committee in seeking to minimise that possibility, but she departs from that broad consensus in thinking that specific language to take account of the problem is not required in the Bill. Her doubts about the language chosen by the Law Society and very ably advanced initially by the noble Lord, Lord Kingsland, are hard to comprehend when she knows that the Law Society is not setting its face against alternative business structures and has drawn attention to how they might amplify consumer choice.
	The Minister does not draw attention, as she should, to the use of the word "appropriate" in the amendment, which sets at nought the anxiety that, by referring to a particular objective, it will blot out the other objectives in Clause 1. It is clearly implicit that in drafting the rules the licensing authority can do only what is appropriate in the context of the rest of the Bill. This is not the first time that we have addressed these questions, so the fact that they will be reconsidered again does not reassure me, when the committee over which the noble Lord, Lord Hunt, presided recommended that explicit language was needed—not just a ministerial assurance about broad objectives, not something encompassed in the broad objectives spelt out in Clause 1, but specific language dealing with this clear and present risk.
	I should like to hear before this debate concludes that some effort is being made by inventive aides to the Minister to tackle this problem by legislation.

Baroness Ashton of Upholland: I should be more than happy to give the assurance that I have very inventive aides who are looking at a number of issues raised in Committee. As I said at the beginning of this stage, for me as a Minister Committee is in many ways the most important stage, because it enables me to hear about areas of concern and to think about those that we can address. I am trying to say, although clearly not very well, that on this question I can see entirely what motivates noble Lords throughout the Committee who feel strongly that in what we say and do we must be very mindful of the potential detrimental impact or chilling effect—whatever language noble Lords choose to use.
	Noble Lords have mentioned rural communities and the issue of high street companies versus big companies that move in. I am very mindful of all those issues, which the noble and learned Lord, Lord Woolf, has discussed separately with me. I am perfectly committed to look at the language in the legislation, as the noble Lord asks. In the regulatory objectives we must ensure that there will be no unintended consequences, but I am happy to look at what more we can do, in the context of what the noble Lord, Lord Kingsland, seeks to achieve in his amendment. Noble Lords will find out what I have achieved by the next stage and make their decisions accordingly. I am trying to build up a picture of the areas of concern, precisely because those issues get raised again.
	The noble Lord may be irritated with me because we keep returning to the same issues, but unless I have the chance to look across the Bill to see what noble Lords seek to do, it will be very difficult to come back with solid proposals at the next stage, which is what I want to do.

Lord Kingsland: I am most grateful to all Members of the Committee who have intervened in the debate and to the Minister who replied. I start off by asking the Minister whether she would like, between now and Report, to think a little further about how the Government define "consumer". We have heard in the course of the Committee that the Government are in many ways driven by the consumer interest and their desire to ensure that the consumer gets good value for money, but what do they mean by "consumer"? Do they mean someone living in a remote rural area, the kind of consumer to whom, for example, the noble Lords, Lord Thomas of Gresford and Lord Carlile, referred? Does the Minister mean the kind of consumer who, if not impoverished, is rather short of money and needs to know about really quite complex legal issues, perhaps associated with social security? Or does she mean the kind of consumer who drives around in a nice motor car and frequents supermarkets and such places where they can purchase really quite desirable and expensive products?
	If the Bill is to achieve the Government's stated objective, all the interests of all those consumers must be taken into account. It is simply not possible to talk about the consumer interest in general. One has to break down what one means by consumer in a particular set of circumstances, and, from the way in which the legislation is set out, I see no evidence whatever that the Government have even begun to think about that.

Baroness Ashton of Upholland: I agree completely with the noble Lord about the need to be clear about the different kinds of consumers. From my own experience in other walks of life, I believe that it is crucial that we think about the poor and the elderly as two groups who find it difficult to access all kinds of services. The provision of good, high-quality, low-cost food, for example, has been an issue on housing estates where people have poor diets, and so on. It is an absolutely classic issue for me.
	I do not agree with the noble Lord's assertion that the Government have not thought about that matter, but I know that I have some work to do before Report in convincing noble Lords that we have thought through the issues for all those different consumers, precisely for the reasons that the noble Lord gave.

Lord Kingsland: I am most grateful to the Minister. I would only suggest that if, in the tranquil days that she will enjoy after today's proceedings, she were to look at this debate, it would strike her most forcefully that the Government must address the definition of the consumer in considering what to do about this amendment.
	My noble and learned friend Lord Mackay of Clashfern, in a characteristically apposite intervention, put it to the Minister that the amendment was a long way away from imposing an overarching obligation on the licensing authority. I invite the noble Baroness to look again at the wording of the amendment, which requires,
	"the licensing authority to consider the likely impact of a proposed application on access to justice".
	That is all. It requires the licensing authority to take account of the effect that a proposed ABS would have on access to justice. It in no way seeks to undermine or displace the regulatory objectives under Clause 1(1). Access to justice is one of those regulatory objectives, but once this analysis has been carried out it will be placed in the context of all the other six. In my submission the notion that the amendment in some way imposes an overarching obligation is misplaced.
	Is the noble Baroness really suggesting that there are circumstances in which access to justice would not be part of an analysis by a licensing authority when considering the establishment of the ABS? Is the noble Baroness seriously considering that a licensing authority might not take access to justice into account and not do an appropriate analysis of the impact on access to justice if it was faced with an application for an ABS? I see that the noble Baroness shakes her head.

Baroness Ashton of Upholland: No, I am not. I have already apologised for using the word "overarching", which was clearly not right. I was trying to indicate the difficulties of prioritisation. I have already said that I shall consider whether this part of the Bill is properly worded to ensure that the concerns outlined are dealt with properly.

Lord Kingsland: I am most grateful to the noble Baroness but this amendment is not about prioritisation. It is simply about requiring the licensing authority to take it into account by doing an analysis to determine the impact of the proposed ABS on access to justice. Those discoveries would then be set in the context of the objectives of Clause 1(1). That is all the amendment does.

Baroness Ashton of Upholland: I understand exactly what the noble Lord seeks to achieve in his amendment. However, I am advised that there is an issue about whether the amendment would present that issue as a priority, which is the point I was trying to make. The noble Lord says that he seeks to achieve something slightly different. This is incredibly helpful because, when considering how we address the concerns that were raised, I will have at the forefront of my mind what the noble Lord seeks to achieve. I am very grateful to him for that.

Lord Kingsland: If I may respectfully submit, it is not just what I am seeking to achieve, it is what the amendment says. All the amendment requires is that an impact assessment is made by the licensing authority, which can then go back to Clause 1 and make of that impact assessment what it may.
	I am very struck by my recollections of debates during the passage of the Access to Justice Act 1999. The then Lord Chancellor was at pains to emphasise the importance of the principle of local justice locally delivered. He emphasised it in the context of magistrates, other local courts and criminal defence. Indeed, that was the basis on which the Government established the Criminal Defence Service in that Act. It must follow that the principle of local justice locally delivered should apply equally to legal advice. Legal advice locally delivered must complement the principles of the public provision of courts and defence services. Over a very long period that principle has run through government thinking about the law and the way it should be made accessible to the public.
	The Government are often accused of changing their principles or, indeed, on some occasions, abandoning them. Here is an opportunity for the noble Baroness to stick to a declared principle of the Government that, as I understand it, has run through what successive Lord Chancellors since 1997 have sought to achieve. I put it to her that rejecting this amendment would be an open invitation to licensing authorities to ignore analysis of the access to justice impact of any proposed ABS.

Lord Thomas of Gresford: I wonder whether the noble Lord shares my growing suspicion that one of the reasons for the objection to his amendment is that if large commercial organisations are to be granted a franchise, as it were, to open up legal services at all their branches, the Government might think it too much of an imposition to require them to assess the impact in every area where they have a branch.

Baroness Ashton of Upholland: Certainly, we would have to think about how to do it and discuss this point with those who are considering becoming licensing authorities. As the noble Lord says, if you are going to do an impact assessment, it is important to do it properly. We would need to consider all those factors, as I said.
	I am not moving away from any of the principles of local provision; however, people get services in lots of different ways. They do not get them just through local services on the high street, important though that is. People get their services by telephone, the internet and in lots of different ways. The critical issue is to provide a range of opportunities for people to get high-quality services, including those in their locality, for all the reasons that we discussed.

The Duke of Montrose: On the previous Committee day I asked how the Government would assess the impact on rural and disparate areas. Will the Minister indicate how they will approach the matter, even if she does so in writing?

Baroness Ashton of Upholland: I should be more than happy to do that. The noble Lord, Lord Kingsland, has tabled amendments on issues to do with monitoring and so on. If I may, I shall leave some of my remarks until we discuss those amendments. I accept that this is a very important issue.

Lord Kingsland: It is plain that the noble Baroness is not going to accept the amendment today. She said that she wanted to reflect on all the points raised in the debate. It is only fair that she is given the opportunity to do so. However, I hope that she will not mind my saying that I have not yet heard a convincing argument from the government Benches that the amendment in any way undermines the Bill's regulatory objectives; on the contrary, it would assist the Government to achieve its objectives. I hope that the noble Baroness will accept the amendment on Report. Meanwhile, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Hunt of Wirral: moved Amendment No. 108D:
	Clause 81 , page 47, line 25, at end insert—
	"( ) a provision requiring a body licensed by a licensing authority to comply with the law, professional rules and statutory and non-statutory provisions applicable in any jurisdiction outside England and Wales where the body may intend to conduct business,"

Lord Hunt of Wirral: Although Part 5 applies to England and Wales only, there will be an impact on Scotland arising from the creation of alternative business structures. I am therefore obliged to the Law Society of Scotland for having assisted me in drafting a series of amendments which are designed to probe the extent to which alternative business structures will comply with the law of the jurisdiction within which they operate. A later amendment provides for a monitoring and research programme.
	This is a probing amendment, designed to explore the extent to which licensed bodies will be obliged to comply with the law, the professional rules and the statutory and non-statutory provisions that apply outside England and Wales. There are many provisions, whether in statute or common law, that could apply to licensed bodies if they conduct business outside England and Wales. I hope that this provision will highlight the bodies' obligations under the law as it applies in other jurisdictions. I beg to move.

Lord Kingsland: Perhaps I could say something about the amendment. As my noble friend rightly says, Part 5 applies only to England and Wales, but it is inconceivable that it will not have an effect on other jurisdictions, most notably and immediately Scotland. As he says, the amendments are designed to explore the impact of the ABS on other jurisdictions.
	Amendment No. 108D would compel the licensing rules for alternative business structures to include a provision relevant for those cases where the new business structure is intent on conducting business outside England and Wales. The amendment is probing what steps the Government will take to oblige licensed bodies to comply with the law, professional rules and other provisions in the jurisdiction where the body intends to conduct business. There are very many statutory or common law provisions that could apply to licensed bodies if they extend their reach outside England and Wales, as it is likely that many of them will seek to do, whether to explore a commercial opportunity, or because, for example, a former solicitor's firm has existing ties outside the jurisdiction. This provision will enunciate the licensed bodies' obligations under the law as it applies in other jurisdictions.
	Amendments Nos. 108E and 108F involve the duties of non-authorised persons. Clause 88 provides that a non-authorised person who is an employee or manager of an ABS must not cause or substantially contribute to a breach of duties by either a licensed body or an authorised person who is an employee or manager of that body. This pair of amendments would extend that provision. In some circumstances, a non-authorised person may have authority over an employee who is subject to the professional regulation of either the Law Society of Scotland or that of Northern Ireland, or alternatively the Faculty of Advocates or the General Council of the Bar of Northern Ireland. It would be important that the non-authorised person does not act in such a way as to cause professional difficulty for such employees, who will be subject to their own conduct rules.
	Amendment No. 108G is necessary because in some circumstances non-English lawyers may be able to form ABS firms with English lawyers. Clause 107 is an extra-territorial clause and should be amended accordingly to read "outside England and Wales". The amendment would allow the Secretary of State to modify Part 5 to take account of where non-English lawyers come from, no matter what regime they are subject to, including Scotland and Northern Ireland.

Baroness Ashton of Upholland: The noble Lord, Lord Kingsland, has referred to three different groups of amendments—

Lord Kingsland: I apologise. I was operating from a list that emerged last night, and I am afraid that I have muddled it up with the most contemporary list. I apologise for confusing the noble Baroness and my noble friend Lord Hunt of Wirral, who no doubt would have said more or less everything that I said, but at a later stage of the proceedings.

Baroness Ashton of Upholland: The noble Lord is very generous; I thought he was just keeping me on my toes. I can respond to all the amendments. I do not know whether the noble Lord, Lord Hunt, wants to come back and talk a bit more about the others, and I can cover all three groups together if that would be of assistance.

Lord Hunt of Wirral: I believe my noble friend has said all that needs to be said, so I await the Minister's response on all the amendments. Let us take them together.

Baroness Ashton of Upholland: I shall certainly try; it may sound a bit more disjointed than it would otherwise, but perhaps Members of the Committee will bear with me. I am grateful to the Law Society of Scotland for suggesting these probing amendments, because it is helpful to be able to talk through them and put them on the record.
	I shall start with Amendment No. 108D. Licensed bodies will be obliged as a matter of course to comply with the rules of the jurisdictions in which they operate. That has always been true, as noble Lords will know, for lawyers or authorised firms conducting business abroad, and the same automatic obligations will apply to licensed bodies. The actual monitoring and enforcement of compliance with foreign laws, on the other hand, should rest with foreign regulators. While the board, approved regulators, and licensing authorities may be interested if there were breaches of foreign rules by the persons that they regulate, it would be difficult to place them under a specific statutory duty to ensure that none of those rules was breached. That would be disproportionately burdensome and inappropriate. Any failure to comply with any specific statutory duty to this effect could leave those bodies open to judicial review.
	The way in which the Bill is framed makes the primary function of approved regulators, including where they act as licensing authorities under this part, to regulate the carrying out of reserved legal activities in England and Wales. To subject licensing authorities to a duty to be aware of and monitor ABS firms' compliance with a potentially endless range of foreign laws and rules would go far beyond this purpose and could even detract from it. Local standards are best enforced by local regulators. That is how it has worked before, and it should continue in these new forms of practice.
	I am aware, and we have already discussed in your Lordships' House, that concerns have been raised that elements of our proposed ABS firms may not be acceptable to regulators overseas or elsewhere in the United Kingdom. I emphasise that that is no reason to deny a greater choice of opportunities for those providers and consumers who are in a position to benefit. The provisions are facilitative. This Bill is not for one moment seeking to encourage the legal sector to attempt to establish structures in those foreign jurisdictions where the regulatory framework does not allow it. I hope that will deal with that point for the record.
	Amendments Nos. 108E and 108F, spoken to by the noble Lord, Lord Kingsland, seek to extend the scope of the duties of non-authorised persons to provide that duties of Scottish and Northern Irish solicitors and barristers are treated as equivalent, for the purpose of this clause, to duties of authorised persons under this Bill. The duty that the existing Clause 88 imposes is important. It ensures that in the new forms of practice that Part 5 makes possible, non-lawyers will have to refrain from causing or substantially contributing to breaches of lawyers' professional conduct obligations.
	Non-lawyers can play a greater role in the management and ownership of legal practices, but they will not be able to act in a way that jeopardises the professional obligations of authorised persons. It is an important part of our safeguards, and it is deliberately focused on the professional conduct obligations and other rules of approved regulators and licensing authorities under this Bill. I have no doubt that the spirit behind the amendment is in keeping with the spirit of these safeguards, and that the noble Lord is seeking to preserve the highest standards of ethics and quality.
	It should not, however, be the function of Clause 88 to extend this duty to laws and legal professional rules from other jurisdictions. That would create duties for alternative business structure employees and managers to be aware of and respect laws and rules outside the sphere of regulatory arrangements, at the risk of significant penalties; and it would put licensing authorities under the increased regulatory burden of monitoring compliance with laws and rules from other jurisdictions.
	Perhaps I may explain further. Unlike registered European lawyers, Scottish and Northern Irish lawyers may not conduct reserved legal activities in England and Wales simply by using the qualifications they have earned in their home jurisdiction and registering with a regulator here. They must become specifically authorised by a regulator here, as lawyers in England and Wales must, which typically means becoming qualified as a barrister or solicitor in England and Wales. In other words, Scottish and Northern Irish lawyers must become authorised persons in order to carry out reserved legal activities, and they will therefore be regulated under the Bill as authorised persons and subject to the professional conduct rules and other regulatory arrangements of approved regulators.
	It is true of course that Scottish and Northern Irish lawyers will be able to work in alternative business structure firms and draw on their training and experience in providing non-reserved legal services. The same would be true of other non-registered foreign lawyers, chartered tax advisers and academic lawyers, to give but a few examples. But that does not mean that any duties to which lawyers from other jurisdictions may be subject should be treated in the same way as the duties of authorised persons.
	The amendment would place licensing authorities under an obligation to recognise law and legal professional duties and ensure that non-lawyers within ABS firms refrain from causing breaches of these. This goes well beyond current practice. As noble Lords will know, no such statutory duty applies to existing legal services regulators or providers. This duty would present a number of difficulties—it would increase the regulatory burdens for licensing authorities and apply sanctions to employees and managers who cause or substantially contribute to non-compliance with these duties. It would increase the burden upon non-lawyers in ABS firms, who will need to be familiar with these duties in order to ensure that they do not contribute to breaches. The amendment would be onerous, burdensome and inappropriate, especially in light of the current position.
	Amendment No. 108G would extend the scope of the provision at Clause 107 to apply not only to bodies formed outside UK law or relevant statutory provisions affecting those bodies, but to bodies formed outside England and Wales. Clause 107 allows for Part 5 to be adapted to differences in company structures and other foreign entities, such as differences in management and ownership structures. Since business associations are generally reserved to Westminster, this clause was drafted with only the differences in foreign law in mind.
	However, we are looking into whether there could be any material differences in laws deriving from devolved matters or otherwise and I would like to take that amendment away and investigate the issue further. I would be grateful if the noble Lord would withdraw the amendment, so that we can return to it when we have carried out those investigations.

Lord Hunt of Wirral: I am very grateful to the Minister for what she said on all these amendments and I am particularly grateful to my noble friend for speaking to the remaining amendments in what perhaps should have been the group before us. Obviously, I would like to reflect on what the Minister has said and to seek the advice of the Law Society of Scotland. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Kingsland: moved Amendment No. 108DA:
	Clause 81 , page 47, line 36, at end insert—
	"( ) section (Low risk body exemptions) (which exempts low risk bodies defined by section 106(2)(b) from certain provisions), and"

Lord Kingsland: In speaking to the amendment, I shall touch also on Amendments Nos. 108FA, 108FB, 108FC, 108FD and 108FE in the group.
	They are probing amendments designed to ask the Government two questions. The first is completely innocent: why should trade unions have the exemption from certain requirements under Schedule 11, given to them by Clause 103? That is a request for information.
	Secondly, if trade unions have exemptions of that sort, why should those exemptions not be granted also to other low-risk bodies? Amendment No. 108FA would allow low-risk alternative business structures the same exemptions as those that are sought to be given to trade unions. We recognise the overall need for the safeguards put forward in this part of the Bill, but in these special circumstances, if the Government are already making exemptions, they might appropriately make another exemption here. Those bodies could utilise existing positions, as they would already have the equivalent of a head of legal practice and a head of finance and administration. Here the Bill is promoting unnecessary measures with regard to low-risk bodies.
	Finally, Amendments Nos. 108FB, 108FC, 108FD and 108FE seek, shortly, to raise the number of non-lawyers that could allow an alternative business structure to qualify as low risk. The amendments reflect the belief that in assessing risk, it is not the number of lawyers that should be taken into account, but rather the professional and ethical standards of the individuals involved in ownership and management of the ABS. For example, professional accountants do not contribute any greater risk to the structure. I beg to move.

Lord De Mauley: I support my noble friend Lord Kingsland in moving the amendment and I declare an interest as a fellow of the Institute of Chartered Accountants in England and Wales.
	Amendment No. 108FA would give what the Bill calls "low risk" alternative business structures merely the same exemptions as those that are already offered by the Bill to trade unions. Like my noble friend, I cannot see the justification for a more heavy-handed approach with regard to low-risk bodies which would consist of a considerable majority of regulated professionals who would already hold positions of head of legal practice or head of finance. The crucial consideration must surely be that of the risk to the consumer.
	To my mind, the most important amendments in the group are Amendments Nos. 108FB to 108FE, which would extend the definition of low-risk alternative business structures to allow them to include more non-lawyers. Again, I would ask that the decision be taken on the level of risk to the consumer. Risk does not come from the number of non-lawyers, but derives from the number of non-professionals. The real concern over alternative business structures is a potential lack of effective regulation and professional standards. The amendments would not reduce the number of highly qualified professionals needed to make a low-risk body and would not lower the number of strictly regulated individuals necessary.
	Members of the Committee will appreciate that there is a significant difference between, on the one hand, highly qualified professionals, such as chartered accountants or chartered surveyors, collaborating, and, on the other, the "supermarket law" concept that is liberally raised in discussion of this issue. Furthermore, these professionals are not undertaking to provide legal services themselves. I sympathise with concerns voiced at earlier stages by noble Lords on all sides of the House in those respects.
	Finally, why should alternative business structures involving other regulated, properly trained professionals be made to wait significantly longer under the new regime than legal disciplinary practices involving solicitors and barristers?

Baroness Ashton of Upholland: I am grateful to both noble Lords who have spoken. Perhaps I may begin by talking about the role of trade unions under Clause 103.
	We do not think that the requirements relating to Clause 103 would be appropriate. First, there is the issue of ownership: trade unions are not owned except by their members, and so different issues apply. They also generally provide services only to their members and ex-members and sometimes to members' families. They are regulated under specific industrial relations legislation and their lawyers are regulated by individual regulators such as the Law Society. In some cases, they are highly dispersed organisations. They rely heavily on non-lawyer advisers in the workplace to carry on the front-line role of advising their members. We believe that all those features make some of the licensing provisions unnecessary or unworkable.
	Clause 103 removes the Part 5 requirement to designate a head of legal practice and a head of finance and administration, and it removes the ownership requirement—the fitness-to-own test—set out in Schedule 13. That is why trade unions are treated differently in this context. I should be very happy to get further information from my colleagues if that would be of benefit to noble Lords.
	I turn to the specific issues raised with regard to what we could describe as the second potential category of low-risk bodies. As we have made clear—noble Lords have discussed this today and on previous occasions—a body must have less than 10 per cent management and ownership by non-lawyers if it is to qualify as a low-risk body. The amendment would effectively raise that level to 25 per cent where the non-lawyer managers and owners were members of a recognised professional body. That would include professionals such as chartered surveyors and accountants, as well as professional firms regulated by the relevant institutes. So, in the context of the amendment, a partnership with a quarter of partners who were other professionals, or indeed a legal practice that was 24 per cent owned by an accounting firm, would be a low-risk body.
	We do not think that this change would be appropriate. Practices within this category are a type of multi-disciplinary practice, albeit a majority lawyer-controlled one, and perhaps should not be so readily judged "low-risk" as practices with genuinely de minimis levels of non-lawyer control. We would move away from risk-based regulation into the possibility of regulatory loopholes. I wholeheartedly endorse the potential for lawyers to form practices with other professionals, with the benefits that that might bring for them and for the consumers whom they serve. But we need effective safeguards to ensure that legal professional principles and ethical practices are maintained. The head of legal practice and the head of finance and administration and the tests that Part 5 creates for external owners are key to this. Taking practices with significant levels of non-lawyer control outside the scope of those safeguards would go against the recommendations of Sir David Clementi and could leave them open to the types of risk that Part 5 seeks carefully to mitigate.
	I understand the basis on which the noble Lord moved the amendment and the basis on which it has been supported, but we think that there are differences in the de minimis risk of 10 per cent and below, moving up to a much higher level of ownership. An important point is that we do not want this regulation to be heavy-handed. That would not be the basis on which we would operate. Therefore, noble Lords need to think of this issue in the context of ensuring that we act effectively and properly to safeguard not only the consumer but especially the legal practitioners. Therefore, I hope that the noble Lord will withdraw his amendment.

Lord Kingsland: I am most grateful to the noble Baroness. I found her response extremely well argued but quite unconvincing. I shall go away and read it and consider whether to bring this matter back on Report. Meanwhile, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 81 agreed to.
	Schedule 11 [Licensing rules]:

Lord Kingsland: moved Amendment No. 108DAA:
	Schedule 11, page 173, line 8, at end insert—
	"( ) Licensing rules may provide for fees to cover the whole cost of the licensing authority dealing with the application, whether the application is granted or not."

Lord Kingsland: This amendment is intended to ensure that the licensing rules can put the whole cost of dealing with an application on to the applicant, rather than leaving a part to be borne by others regulated by the licensing authority concerned.
	It is an important principle that the costs of regulation should be borne by those whose activities give rise to the cost rather than by the regulated sector as a whole. This is vital in the case of alternative business structures, where some applications could give rise to extremely complex issues.
	It follows that it would be quite unsatisfactory for a single flat fee to be applied to all applications, whether from an applicant filling a modest and localised gap in legal services or from a supermarket seeking to set up a substantial new service. If a single fee were set so as to meet all the costs of dealing with ABS applications, the result would be grossly unfair to the small applicant. On the other hand, a single fee at the level appropriate for the small applicant would involve an unacceptable cross-subsidy from the rest of the regulated sector. In any event, if licensing authorities were unable to match the fee to the cost of dealing with the application, they might be inhibited from investigating applications as thoroughly as they should, particularly where access-to-justice considerations arise.
	Amendment No. 108DAB, which is also in this group, is designed to ensure that the onus of demonstrating fitness to own rests on the applicant, rather than the licensing authority having to approve them unless it can demonstrate that they are not fit or proper persons. The effectiveness of the fitness-to-own provisions is a critical element of the public protections that need to be in place before alternative business structures involving external ownership can be safely permitted. The Bill provides for licensing authorities to consider whether those who hold more than a small interest in a prospective alternative business structure firm are fit and proper persons.
	In paragraph 14 of Schedule 13, under which a licensing authority may require non-authorised persons to provide it with such documents and information as it may require, it appears to be the intention of the Bill that the applicant should demonstrate fitness to own, rather than that the applicant should be entitled to be approved unless the licensing authority can demonstrate that it is not fit to own. However, merely demonstrating an absence of criminal convictions should not be sufficient to entitle an applicant to become an approved person. For example, the possession of unexplained wealth could give rise to reasonable suspicions about the integrity of an applicant. It is important that the licensing authority should be able to refuse approval in those circumstances, unless it received a convincing explanation of the source of the wealth. The amendment is intended to put beyond doubt the fact that the onus of proof on these issues should rest with the applicant. I beg to move.

Baroness Ashton of Upholland: The noble Lord continues to keep me on my toes: I thought that these two amendments appeared separately on the groupings list but I shall deal with them together. That is not a problem as they follow each other on the Marshalled List and it makes complete sense to put them together.
	I do not think that Amendment No. 108DAA is necessary but I entirely agree with the sentiments behind it. It is reasonable to expect a licensing authority to be able to charge the full cost of processing licence applications. That extends to charging the full cost of each individual application, whether successful or not. Applications will generate varying amounts of work depending on the nature of the applying body, the nature of the services that it intends to offer and the size of the operation that it plans. For example, a large firm intending to open in a number of locations will need more consideration than a small firm intending to open in only one. It would be difficult for application fees to be refunded if unsuccessful. That would increase pressure on the licensing authorities to grant applications where they should not really do so. Non-refundable application fees are common and I cannot see licensing authorities differing from what I would describe as usual practice.
	We do not want one firm to end up subsidising another if the full cost is not charged in each case. That would create problems and it would make the authority unattractive to firms if fees for them were disproportionately high. I assure noble Lords that fee levels and their effects on legal services markets can be monitored. Fees form part of the licensing rules. Rules may specify that costs have to be recovered in full from fees or may set individual fees based on the amount of work individual applications are estimated to need. Rules have to be acceptable to the board before it will put a body forward for designation as a licensing authority. If there are concerns about effects on smaller firms or on competition, they can require changes. I hope that that reassures the noble Lord.
	I turn to Amendment No. 108DAB. I agree entirely with the principle of this amendment. It is right and proper that, in allowing non-lawyers to invest in law firms, we ensure that the onus is on those people to prove that they meet the standards of regulators. A licensing authority will be under no obligation to approve the holding of any particular interest merely because it has no evidence that the person is somehow not fit and proper.
	Instead, licensing authorities will have to be satisfied that the applicant in question has actively demonstrated that he meets the approval requirements set out in paragraph 6 of Schedule 13, but I am confident that we have achieved in the schedule what the noble Lord is seeking to do. The test for approval of an interest is set out under paragraph 6 of the schedule. In the case of every applicant, the licensing authority must be satisfied that the proposed interest will not compromise either the regulatory objectives or the ability of ABS firms and the individuals within them to comply with regulatory arrangements. In addition, the licensing authority must be satisfied that the individual or firm is fit and proper to hold the interest, having particular regard to the applicant's probity and financial position, any associates, whether the applicant has been previously disqualified from involvement in an ABS firm or indeed any other relevant matter.
	Under paragraph 14 of the schedule, licensing authorities may require further information from non-lawyer investors, and under paragraph 19 they may object to the holding of the interest in question if they are not satisfied that the approval requirements are met. Licensing authorities are therefore required to consider a wide range of matters, but the burden of proof in satisfying each individual requirement rests with the individual applicant. I would in no way wish to provide for a situation where licensing authorities were somehow bound to give approval to investors about whom they had doubts because they did not have sufficient evidence to prove those doubts, but as I have stated, that is not the effect of the provisions.
	If the information which the applicant provides is not sufficient to satisfy the licensing authority under each and every head of the test, the licensing authority may refuse its approval. I would argue that the noble Lord's amendment is unnecessary as the provision already achieves the desired outcome in this regard. I hope that answers the noble Lord's questions.

Lord Hunt of Wirral: In saying how strongly I support these amendments and all that my noble friend has already said, I respectfully point out that the latest Marshalled List that I have shows my noble friend to be in the clear in that Amendment No. 108DAA is to be taken with Amendment No. 108DAB.

Baroness Ashton of Upholland: He is always in the clear with me.

Lord Hunt of Wirral: I hope Hansard will put those words in block capitals. However, there is a doubt. As the noble Baroness has made it clear that she believes that Amendment No. 108DAB is unnecessary, will she give a little thought to why there is a doubt? Perhaps we can explore ways of putting the matter beyond doubt other than in this proposed amendment. I hope she will agree to look at that.

Baroness Ashton of Upholland: I am always happy to look. As I have indicated, at the end of Committee stage, I shall be checking things. I want to put on record why we think it works, in the hope that between Committee stage and the next stage we will have had a conversation about whether Members are satisfied that we have that right. If not, I want to be able to get more advice from either parliamentary counsel or legal advisers on why it works, so that we come to an agreement. We are really in the same place, but we think we have achieved it. If there is doubt, of course, I shall look at it again because we want to achieve the same thing.

Lord Kingsland: I was extremely happy to hear that the noble Baroness entirely accepts the logic behind both amendments. If there is a difference between us it is whether the text of the Bill satisfactorily expresses what we both wish it to express. The noble Baroness feels that it does, but we have some doubt about that. As we are agreed on the objectives, I hope that the noble Baroness will consider between now and Report whether she is absolutely right in thinking that the Bill covers all the eventualities that we fear might be provoked if the Bill is not absolutely clear. I see the noble Baroness nodding, so she plainly will so act. In those circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Schedule 11 agreed to.
	Clause 82 agreed to.
	Schedule 12 agreed to.
	Clauses 83 to 87 agreed to.
	Schedule 13 [Ownership of licensed bodies]:
	[Amendment No. 108DAB not moved.]
	Schedule 13 agreed to.
	Clause 88 [Duties of non-authorised persons]:

Lord Kingsland: moved Amendment No. 108DB:
	Clause 88, page 50, line 9, leave out "an employee or" and insert "a"

Lord Kingsland: This amendment was rightly provoked by the City of London Law Society. Its purpose is to avoid imposing professional duties, which are statutory, on non-professional members of staff. Briefly, Clause 88 imposes an obligation on non-authorised employees of an ABS to refrain from doing anything that contributes to a breach of professional duties of an authorised person. So, for example, a secretary who types and sends correspondence on the wrong letterhead could be directly and personally liable for a breach of professional rules even though he or she had not had the benefit of professional training and nor would he or she hold a professional qualification. Therefore, there is a justifiable perception that that is unfair. Professional duties should not be extended on a statutory basis to non-professional members of staff. It is also perhaps unnecessary, to the extent that solicitors are already responsible for breaches of professional duty caused by their members of staff. I beg to move.

Baroness Ashton of Upholland: I am grateful to the noble Lord. I shall reiterate the duties in Part 5 designed to protect lawyers' professional obligations. Clause 88 protects Clause 169, in that Clause 169 places a duty on regulated persons to comply with regulatory arrangements applying to them, including practice rules and rules of professional conduct, many designed for client protection. For licensed bodies, regulatory arrangements will include licensing rules and all the safeguards that they contain. Regulated persons are authorised persons, and managers and employees of authorised bodies.
	Clause 88 deals with non-authorised employees, and managers must do nothing that causes or substantially contributes to a breach by a body or authorised person of the Clause 169 duty, the point referred to by the noble Lord, Lord Kingsland. We have made it clear that compliance with Clause 88 is one of the main responsibilities of the head of legal practice. Those who breach Clause 88 duties can be disqualified under Clause 97 from employment in any licensed body.
	These are important protections. They ensure that authorised persons' professional obligations and alternative business structures' safeguards are protected from undue influence within the firm. They answer concerns about allowing non-lawyers to be involved in the management and ownership of law firms. I would be nervous of supporting an amendment that could create a huge loophole in that.
	I understand the desire to remove obligations on non-professional members of staff and perhaps to replicate the position of solicitors' firms, where employees are under no specific obligations and managers are all authorised persons. However, these firms will be different and the provision is not applicable to them. There will be new mixes of authorised and non-authorised persons. Traditional structures will not be universal, and we must recognise potential new risks in the safeguards we create.
	Removing employees would remove a key safeguard that the Bill places on them to ensure that they do not cause or contribute to breaches of firms' and lawyers' professional conduct obligations. We are not obliging employees to ensure that lawyers respect their professional conduct rules; that is one of the head of legal practice's responsibilities. Clause 88 only puts them under a duty to refrain from exercising adverse influence or otherwise causing, or substantially contributing to, breaches of rules.
	The noble Lord may think that is unnecessary because many employees are not in a position to influence the firm's performance of its obligations. That may be so, but some employees will be. Some will be in decision-making positions and other positions with considerable direction or supervision. If an employee's job would not allow him or her to contribute to a breach of Clause 169 there should be no problem, but we cannot assume that all employees will be in that position. The Clause 88 duty should, in practice, catch only those who are in a position to exert influence or otherwise substantially contribute to breaches. It would also remove an important element of licensing authorities' direct regulatory control over non-authorised employees. Where they did cause or contribute to a breach of Clause 169, direct action could not be taken against them but there would have to be action against the firm instead. That could be unfair and disproportionate, especially if the employee acted outside the firm's control.
	Most importantly, perhaps, the amendment makes it easier for non-authorised employees to interfere improperly in the licensed bodies' operation. That goes against our view of the safeguards, and the need for them as expressed in your Lordships' House. I hope that answers the noble Lord's question of why the provision is written in that way, and that he feels able to withdraw his amendment.

Lord Kingsland: I am grateful to the Minister for her response, and can see that Clause 88 is, in practice, intended only to comprehend those who exert real influence over a firm's decision-making. In the normal course of activities, that would exclude the example I gave in my opening remarks.
	Once again, however, that is not clear in the Bill. It therefore seems that there is discretion under the Bill for somebody who does not exert such influence to be caught by Clause 88 nevertheless. I find it difficult to see how, for example, in a judicial review, a court would conclude that targeting such a person was, in the wording and context of Clause 88, irrational. That is the City of London Law Society's concern. I respectfully suggest that the Minister add this to the long list of matters she already has to reflect upon between Committee and Report. Meanwhile, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendments Nos. 108E and 108F not moved.]
	Clauses 88 to 100 agreed to.
	Schedule 14 agreed to.
	Clauses 101 to 103 agreed to.
	[Amendment No. 108FA not moved.]
	Clauses 104 and 105 agreed to.
	Clause 106 ["Low risk body"]:
	[Amendments Nos. 108FB to 108FE not moved.]
	Clause 106 agreed to.
	Clause 107 [Foreign bodies]:
	[Amendment No. 108G not moved.]
	Clause 107 agreed to.

Lord Maclennan of Rogart: moved Amendment No. 108H:
	After Clause 107, insert the following new Clause—
	"Miscellaneous
	Pilot scheme
	(1) The Secretary of State shall by order establish a pilot scheme for the provisions of this Part.
	(2) In establishing a pilot scheme the Secretary of State shall take into consideration—
	(a) the demography of the area, and (b) the size of the area.
	(3) The Secretary of State shall lay a report before Parliament on the pilot scheme.
	(4) In producing a report under subsection (3) the Secretary of State shall consult—
	(a) such persons or bodies he considers represent the interests of consumers; (b) such persons or bodies he considers represent the interests of approved regulators; (c) such other persons or bodies as he considers appropriate.
	(5) An order under subsection (1) shall be laid before, and approved by a resolution of, both Houses of Parliament."

Lord Maclennan of Rogart: As we reach the end of our consideration of Part 5, I propose a new clause intended to probe how the Government envisage the rolling out of the alternative business structures. It is also intended to let us consider the possibility that, notwithstanding the Government's commitment to the liberalisation of the provision of legal services and all the uncertainties inherent therein, they may be willing to apply, on the ground, the proper test of how it would work in practice.
	When replying to the Government's consultation paper In the Public Interest?, the Law Society said that,
	"there is a risk that there may be long-term structural effects that destroy service provision and the fabric of small communities ... there are very serious risks to access to justice from the uncontrolled admission of new entrants ... We believe that the Government needs to carry out much greater research into the likely impact of liberalisation before taking final decisions on the way forward".
	It is very difficult to carry out research without a pilot scheme. The theoretical response to the liberalisation of the market cannot be wholly successful in answering the great uncertainties to which everyone who has looked at this issue has drawn attention. The Joint Committee that examined the draft Bill drew attention to the possibility—which we debated earlier, at some length, so I shall not rehearse those arguments—that some of the reforms may reduce geographical availability. Its report stated:
	"We recommend that the Government amends the draft Bill to ensure that the impact of ABSs on access to justice, particularly in rural areas, informs the decision-making process for licensing an ABS firm".
	The practicalities of establishing a pilot scheme may seem formidably difficult, and I look forward to hearing what the Minister has to say about them. However, in view of the potential consequences of the implementation of Part 5, it is reasonable to proceed by bringing forward the fruits of a pilot scheme to be considered by Parliament. Those who are satisfied that the project is worth embracing in the interests of the consumer will be fortified if a pilot scheme demonstrates that the fears are unjustified. There is no hurry to reach a conclusion. If one takes the advice of the progenitor of this development, Sir David Clementi, it seems that caution is the characteristic that should govern how we proceed.

Lord Clinton-Davis: For how long does the noble Lord envisage a pilot scheme operating?

Lord Maclennan of Rogart: That is a matter for consideration. I have not attempted to prescribe how long it would be. It should be considered by the Government in consultation with representatives of consumers, the legal profession and those who are interested in providing the service. A pilot scheme would not be conclusive if it was too short, but it would not go on indefinitely. It should cover an area of the country that is broad enough to be representative of a number of different circumstances and contains urban and rural areas, so that it would represent the country as a whole.
	I tabled this amendment at least as much in the hope that the Government will indicate how they propose to roll out the establishment of alternative business structures as to promote the merits of my suggestion, which are, none the less, worthy of consideration. I beg to move.

Lord Borrie: The noble Lord, Lord Maclennan of Rogart, has reasonably and legitimately voiced a number of concerns about alternative business structures. Indeed, the debate on this part of the Bill—which we are nearing the final clauses of—has demonstrated a number of concerns, including access to justice and the availability of legal services in rural areas. The difficulty with the amendment is that there are so many possible varieties of alternative business structures ranging from narrower structures that are combinations of different types of lawyers—barristers, solicitors and others—to the other extreme of alternative business structure where a substantial retail business tacks legal services on to its existing services. In between, there must be a huge variety of structures. I am interested to see various kinds of alternative business structures develop positively to provide services that are not readily available now or to offer them in a way that is of higher quality, better value and more use to communities than the present way in which legal services are offered. One can only speculate about what the structure might be, but I am sure that there will be a huge variety of alternative business structures in different parts of the country, and so be it.
	The part of the Bill that we have just been considering in such detail has a host of restrictions, controls and safeguards to ensure that the things about which the noble Lord, Lord Maclennan, is rightly concerned will be observed in the course of licensing and so on. What would be the value of a pilot scheme involving one kind of alternative business structure when so many other structures would be so different that it would not tell very much? I am all in favour of pilot schemes in principle, but only if we can draw sensible and helpful lessons from them. I do not see that in the noble Lord's proposal.

Lord Clinton-Davis: I endorse the remarks of my noble friend. I wholly embrace the issues, but there ought to be a time limit. I am unconvinced by the noble Lord's arguments. If we are to have any sort of pilot scheme—which I do not approve of anyway—it ought to have a limited life, and he refused to endorse that.

Lord Maclennan of Rogart: With respect, I did not refuse to endorse it; I merely suggested that others might be in a better position to prescribe it.

Lord Kingsland: We are extremely sympathetic to the concerns that the noble Lord, Lord Maclennan of Rogart, expressed, which led him to propose a pilot scheme. Those concerns need to be addressed. However, I share some of the reservations about the appropriateness of a pilot scheme. We prefer the proposal made by my noble friend Lord Hunt, which forms part of the next amendment, for a sunset clause, but I believe that the reasons he proposes a sunset clause do not differ from the reasons that the noble Lord, Lord Maclennan of Rogart, wishes to have a pilot scheme.
	Serious hesitations have been expressed from all parts of the Committee about Part 5. Noble Lords have by no means been, in principle, hostile to ABS; but those concerns are sufficient, in my submission, to require the Government to go slowly, marking every step with clear research about the impact of these structures. The noble Baroness will be familiar with the hesitations we have expressed, perhaps most generally the importance of restricting the Legal Services Board to its supervisory role, our clear preoccupations with the lack of any express provision to reflect access to justice—

Lord Clinton-Davis: Would it not be possible to invigilate what is happening in any event, without endorsing this particular procedure? It would be possible to ask questions and to stimulate debates. There are several ways in which this issue can be embraced.

Lord Kingsland: I am most grateful to the noble Lord for his intervention. That is precisely, as I understand it, the rationale for my noble friend's amendment. The limitation of the pilot scheme, as the noble Lord, Lord Borrie, has pointed out so clearly, is that it would be just one structure in a system which may have many different examples. I apologise for speaking before my noble friend Lord Hunt has had a chance to speak, which I know he will do when the next amendment is called, but the logic behind his amendment is that there should be a period of a number of years during which a whole range of structures might emerge. There could be comprehensive monitoring of all those structures.
	If it transpires that the system is not working as the Government hoped, after five years there will be a cut-off date by which they will, either voluntarily or having been compelled, adjust the system to accord with the monitoring results. That is the strength of the sunset clause as opposed to the pilot project. However, I do not wish to take away anything from what the noble Lord, Lord Maclennan of Rogart, seeks to do. His concerns are plainly our concerns; indeed, they are the concerns as so far expressed on all sides of the Committee.

Lord Mackay of Clashfern: I understand fully what the noble Lord, Lord Maclennan of Rogart, has in mind and the difficulties that the noble Lord, Lord Borrie, envisages in a pilot scheme. It occurred to me as these observations were being made that, if a novel type of organisation or business structure was proposed, it might be licensed for a given time to see what effect, if any, it would have, if it were not possible to be definite about that in advance. Looking at the licensing provisions, I am not certain that a licence for a fixed term is clearly within the powers of the licensing authorities. No doubt, however, if it were thought desirable, that could be made clear.
	I can understand that those applying for a licence might not be anxious to set up an organisation for too short a time. If they were confident that it would be all right, they might be rather put off by the idea that it was for a limited term. On the other hand, if you are not sure what will happen, it is wise to have some way to put something right that, it emerges, does not seem to be going right. That occurred to me as a possible approach—I do not put it more strongly than that—where a particularly novel type of business structure is proposed.

Lord Thomas of Gresford: When listening to the noble Lord, Lord Kingsland, I had in mind the words festina lente, and he then used that expression. It is for the Government to take their time—hasten slowly. A number of possibilities have now been put forward. I think that a blanket sunset clause has its problems, although I shall listen to what the noble Lord, Lord Hunt, says in due course. Obviously there must be investment, which after five years could be considerable in terms of money, buildings, people and careers, so a blanket approach is not so attractive.
	On the other hand, the suggestion of the noble and learned Lord, Lord Mackay, has considerable attractions: a specific type of unusual organisation should be limited in its period. A company or individual who wished to adopt that approach would then at least know how much money and so on to put into that organisation to see whether it worked. At the end of the day, I come down in favour of my noble friend's amendment, which contains the possibilities of more than one experiment. A pilot scheme does not necessarily have to consist of one type of organisation in one place. Proposed subsection (2) suggests:
	"In establishing a pilot scheme the Secretary of State shall take into consideration ... the demography of the area, and ... the size of the area".
	It occurs to me that a sensible way of hastening slowly would be to permit one organisation to operate, for example, in a rural area, another in a town area and another to deal with commercial law or whatever. The approach could be either geographical or functional, but there should be a series of experiments taking into account the criticisms of the noble Lord, Lord Borrie, who suggested that it is impossible to say that there must be one type of organisation. The answer is a series of pilot schemes or the alternative proposed by the noble and learned Lord, Lord Mackay.

Baroness Ashton of Upholland: I am very grateful. I shall not stray into the territory of the next amendment, tempting though it is, because in one sense these issues fit together. However, as the noble Lord wishes to move the amendment separately, I will not do so.
	I understand the concerns behind the amendment, but the difficulties of organising a pilot scheme have been addressed extremely well by my noble friend Lord Borrie. The Joint Committee looked at this possibility, certainly in a geographical area, and found it unworkable. It is very hard to police boundaries because of how services are now provided. Noble Lords will know that telephone or internet services, for example, might apply only to consumers from one area, but it is difficult to prevent them going elsewhere for services and to ensure that services stay within the boundaries of an area.
	Conveyancing, litigation and other services can all have aspects that might not be restricted to defined physical areas. One might limit pilot providers to one area, but it is hard to prevent them offering services to consumers elsewhere.
	In summary, any approach that we think of puts serious constraints on the providers, the consumers or both. Freedom of choice for consumers is limited; providers' freedom over what service to offer and to whom would be limited. Anyone outside the pilot area would be denied the benefits of the alternative business structure. There would be possible anti-competitive results as well.
	The Office of Fair Trading pointed out that the,
	"pilot scheme to test ABSs appears very difficult to implement in any meaningful way and would deliver questionable benefits".
	Obviously, it would delay the implementation of the alternative business structure and the benefits that we hope that it will bring to providers and consumers. The Joint Committee concluded that those problems cannot be overcome and we agreed with that.
	The noble Lord, Lord Maclennan, was keen that we set out as much as we can about the timetable to which the Government are working, and I will endeavour to do so. I will write a note to the noble Lord and others who have spoken and place a copy in the Library.
	From Royal Assent onwards, the Law Society can start to regulate lawyer-controlled legal disciplinary practices. Smaller regulatory bodies—for example; the Council for Licensed Conveyancers, the Chartered Institute of Patent Agents and the Institute of Trade Mark Attorneys—already allow LDPs to operate but will be granted enhanced powers.
	Professional bodies intending to regulate alternative business structures can start to develop their licensing rules. Legal services providers and investors can investigate options for alternative business structure status and develop business plans for change. Certain existing ABS firms—for example, as we discussed earlier, some conveyancing and patent trade-mark practices—can continue under transitional arrangements and adapt themselves to prepare for licensing. As the noble Lord, Lord Kingsland, rightly said, there is an issue to be resolved about the length of the transitional arrangements.
	Between February 2008 and November 2009, the LSB chair would be appointed, followed by the LSB board members and the interim chief executive. The LSB would work with approved regulators, helping them to prepare for designation as licensing authorities. In 2010-11, the LSB can process applications from regulators for designation as licensing authorities. As the Committee will know, professional bodies can become authorised to license ABS firms, but only where the rules are fit for purpose. From 2011 onwards, ABS licences can be granted in accordance with licensing rules and the statutory safeguards that we have set out. I hope that that gives a sense of the time frame to which we are working.
	Licensing for a fixed time for unusual ABSs could happen in theory. The Committee will be aware of the difficulties of that for investors, who would have to think about whether it was worth it. In practice, I do not know whether it would be an option. It would be for the licensing body to consider that.
	I hope that that gives a sense of why we could not accept—

Lord Neill of Bladen: The Minister talked about investors. We had some discussion about who will want to put their money into an experiment that will last, say, five years. That is a real consideration. Are we losing sight of the consumer? We have heard from the noble Lord, Lord Thomas, and others that one factor in the relationship between a client and his or her solicitor is that it is continuing. It would be very odd to go into one of these pilot schemes and say, "I want you to draw up my will, and we very much hope that, if there is a death, you will take on the administration of the estate", and get the answer: "Well, I cannot really tell you whether we will be here in more than five years. We are on an experimental scheme".
	I am not trying to sabotage what the noble Baroness is talking about, but we need to think not only of the investors and those setting up experimental firms but of the clientele.

Baroness Ashton of Upholland: The noble Lord is absolutely right; that is another reason why we do not think that a pilot scheme would work. It also has implications for the sunset clause, to which we will come, but I promised that I would not go into that now.
	I hope that what I said gives a better indication of how the timetable will work. As I said, I shall ensure that it is available in hard copy.

Lord Maclennan of Rogart: I am extremely grateful to all noble Lords who have spoken on the proposal. I am gratified by the range of responses. It indicates awareness that we are taking a leap in the dark and that we should be as inventive and as cautious as may be to prevent untoward consequences flowing from our well intentioned urge to improve the provision of a range of legal services to the consumer.
	It is clear from what the noble Baroness has said that, although the final implementation of the establishment of the alternative business structures is to be postponed until 2011, we will, once we enact the measure, be on a firm course. Although this will proceed in stages, there is no provision that I can see for checking it in the light of second thoughts or other considerations that may become a little clearer than they are now. I realised that, if I proposed the new clause at this stage of the Bill's progress, there was some prospect that the issues of practicality, some of which were addressed by the noble Lord, Lord Borrie, and others, would be likely to be raised. I welcome that, because it enables one to consider further whether there is a more practical way of proceeding that would embody what, I think, is a reasonable objective: to diminish the fear that consumers could be seriously disadvantaged in some parts of our country by the establishment of alternative business structures.
	Having heard the Minister and other contributors to the debate, I will, at this stage, beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Hunt of Wirral: moved Amendment No. 108J:
	After Clause 107, insert the following new Clause—
	"Monitoring and research
	(1) The Secretary of State shall, in accordance with the provisions of this section, provide for the carrying out of a study into the operation of this Part.
	(2) The Secretary of State shall make such preparations for the study to begin as soon as regulations bringing this Part into force; and such preparations may relate to the instruction of a research team and formation of a research advisor group to assist in the direction of the study.
	(3) Within three years of the date on which this Part comes into force, the Secretary of State shall lay before Parliament a report on the results of the study.
	(4) This Part shall cease to have effect five years after the date on which this section of this Act comes into effect."

Lord Hunt of Wirral: We are greatly indebted to the noble Lord, Lord Maclennan of Rogart, for having initiated an interesting debate on the question of pilot schemes. I would now like to try a different approach.
	In the Joint Committee, we spent some time working out how we could foresee some of the problems and difficulties that might arise with alternative business structures. We agreed with the sentiment expressed by the noble Lord, Lord Borrie, that it is difficult to envisage pilot schemes that could adequately test the various structures that might come forward under this part of the Bill. However, we were left with what the noble Lord, Lord Maclennan of Rogart, I think, called a shot in the dark; we were left with the impression that no one was quite sure what would happen. Although, as has just been pointed out, we came to the conclusion that we could not see that a pilot scheme would be suitable for the introduction of ABS licences, we were still very worried about the level of uncertainty that existed about the impact of ABS provisions. That is why, in our recommendations, we urged the Government to use less haste and more care and to follow the approach of the Clementi report, which gave rise to Table 5 on page 85 of our report.
	I am indebted again to the Law Society of Scotland, whose Michael P Clancy, director of law reform, came down and spent some time trying to think through the best way forward. The whole question of alternative business structures has already been considered in Scotland. A research working group on the legal services market in Scotland was established by the Scottish Executive, and I have the benefit of its report, which it submitted last year. That report concluded that the case for alternative business structures in Scotland and the suitability of regulatory arrangements such as those proposed for England and Wales were a matter for further policy development by the Scottish Executive in consultation with interested parties. The report will serve as a basic source of evidence for future consideration of the case for alternative business structures in Scotland.
	Accordingly, Mr Clancy and his colleagues in the Law Society of Scotland concluded that it is vital that proper research of the English provisions is undertaken in order to inform policy development not only in Scotland but in other jurisdictions. I am grateful to him and his colleagues for drafting the amendment, which would provide for a monitoring and research programme into the effectiveness of the mechanism for the regulation of alternative business structures, subject to a sunset provision. When we are as unsure as we are at the moment about what will happen with ABSs, it is right for a properly structured study to be undertaken so that we can examine what effect the ABSs are having.
	The study needs a proper structure. The noble Lord, Lord Clinton-Davis, said that we could consider the matter from time to time and raise it in debates, but there would be nothing as good as a properly structured study, led by the Government in consultation with all interested parties, just to see exactly what was going on and how the whole procedure was developing. That is why in the amendment, which is headed "Monitoring and research", we ask the noble and learned Lord the Lord Chancellor to,
	"provide for the carrying out of a study".
	The obligation is therefore on the Government to carry out a study. The Minister may say that they are going to do that anyway, but I know from my experience in government that all sorts of priorities come across ministerial desks from time to time and take their place in the queue. I would like this House to put this study right at the top of the list.
	The amendment proceeds to suggest that the noble and learned Lord the Lord Chancellor should,
	"make such preparations for the study to begin as soon as regulations bringing this Part into force; and such preparations"—
	these are only suggestions—
	"may relate to the instruction of a research team and formation of a research advisor group to assist in the direction of the study".
	Then, of course, the Government must report to Parliament. There is provision for a report to be laid before Parliament within three years of this part of the Bill coming into force.

Lord Clinton-Davis: Why can it not stop there? It is always possible, if the situation demands it, for the Opposition of the day to say, "This scheme is not working". It is a little unreal to assume that five years would be appropriate, is it not?

Lord Hunt of Wirral: The noble Lord makes an important point, and one that I have discussed with those who drafted the amendment. Do you have a sunset clause at all? If you have one, after what period can you decide that whatever new provisions you have introduced are either working or not working? I agree that it is a key part of all this, but again in many ways we are probing all the time. I would compare this with the conditional fee arrangements, which came in against a background of general acceptance by everyone concerned that we had to try to find a way of making access to justice work, given that the civil legal aid fund would no longer have the necessary resources to allow the old system to continue. We therefore had to find a way of ensuring access to justice.
	I pay tribute to the previous Lord Chancellor, the noble and learned Lord, Lord Irvine of Lairg, for trying to find a route whereby we could introduce access to justice under conditional fee arrangements. As I pointed out at the time, however, there was no real research into how those CFAs were going to operate, and there was no constant monitoring. Much of the information technology that was necessary did not come in in time. In fact, although the judges wanted to direct some of the cases under the new civil law procedures themselves, they had to go outside and use public telephone boxes because telephones had not been installed. The thing started to go wrong, but there was no constant monitoring to highlight what was going wrong and put it right, with the result that we are now constantly trying to revise CFAs.
	As we saw with the Compensation Act, CFAs have resulted in the growth of claims management companies, which should have been avoided. I do not think that anyone realised how many people would suffer as a result of TAG and then Claims Direct going into liquidation, but that was an aspect of CFAs. I do not think that we really anticipated that. Had there been a study and an advisory group as well as the constant need for a report to be given to the House, we may well have avoided many of those situations. At the very least, they would have been flagged up at an earlier stage so that we could have done something about them.
	When we have this sense of uncertainty about what exactly will happen, particularly with the effect on access to justice, I hope that my amendment—again, I am grateful to the Law Society of Scotland for drafting it—gives the Committee cause to reflect on the best way forward to ensure that we do not fall into the sort of traps that we have seen before, when uncertainty has ruled the day and events have taken place that have militated against the whole purpose of this new legislation. I beg to move.

Lord Borrie: The noble Lord's case has been much enhanced by the amendment's heading, "Monitoring and research". Those words are up there with apple pie and motherhood, as who can be against monitoring and research? However, I rather doubt whether monitoring and research require the detail of the proposed new clause and the requirement as to what happens to the results, and so on. In fact, the novelty and the great variety—I referred to those in an earlier amendment—of the likely business structures that will develop probably require continuous monitoring and research. That would be most helpful, but I am not sure that that is what the proposed new clause says. I am particularly concerned about the bull point towards the end of it, which says:
	"This Part"—
	that is, the whole of Part 5—
	"shall cease to have effect five years after the date on which this section of the Act comes into effect".
	We all said when we discussed the previous amendment how often alternative business structures will require a great deal of investment and capital. If the amendment were passed, we would stifle the development, and even the creation, of alternative business structures practically from the start. Either alternative business structures, with all the safeguards of licensing and so on that we talked about earlier in the day, are a good thing—as they are for giving new varieties of provision for the consumer and communities around the country—or you do not like them. The amendment would damage the possibility of this creative development in the Bill right from the word go, and I am wholly against it.

Baroness Butler-Sloss: I am concerned whether, if we start a scheme such as alternative business structures, it will be realistic to be able to bring it to an end. I do not see how one could start something like this. We had the example of the CFO; no one has really suggested that that should come to an end. I wonder whether it is realistic, either by having a pilot scheme or the admirable suggestion of monitoring and research. Perhaps I may respectfully agree with the noble Lord, Lord Borrie. It will be very important to have monitoring and research in order to deal with certain alternative business structures that will become unsatisfactory or are unsatisfactory. It will be important to bring such structures to an end. But once we have opened Pandora's box—if I may put it like that—is it ever possible to shut it?

Lord Thomas of Gresford: I declare an interest in apple pie and motherhood, and in monitoring and research, which are obviously essential to see how the various schemes work. But monitoring and research require something at the end of the process: if the monitoring and research into a scheme say that it does not work, what happens then? I am not attracted by a sunset clause, as I indicated in the previous debate. Perhaps the Minister could assure us that, under Clause 84, the power of the licensing authority to,
	"modify the terms of a licence granted by it",
	and, under subsection (1)(b),
	"in such other circumstances as may be specified in its licensing rules",
	could cover the modification of a class of alternative business structures that were proving to be particularly unsatisfactory as monitoring and research demonstrated. Something along those lines might be a way forward. I am not sure that that was the intention behind Clause 84(1)(b), but the ability to alter a licence significantly to get rid of, for example, cherry-picking in a particular class of alternative business structures would be very desirable. I invite the Minister to consider the proposal along those lines.

Lord Clinton-Davis: I entirely agree with noble Lords who have argued against the idea of a sunset clause. My experience in this House has been that sunset clauses are invariably undesirable. That may not be the experience of everyone, but that is what I think. I have a profound suspicion, therefore, of what is envisaged here. I entirely agree with my noble friend Lord Borrie—not for the first time and, I am sure, not for the last time—who has put his finger on this issue. It is always possible for someone to move that a situation is not working properly, and I envisage that it will be possible in this case as well. So why do we have a sunset clause? The arguments that I have heard today in favour of this proposition have been singularly unconvincing. I would prefer that we should have monitoring and research, which we would always have in any event. Why do we have this provision at all?

Lord Mackay of Clashfern: I understand very well the reason for monitoring and research. Like the noble Lord, Lord Borrie, I would very much be in favour of that when fitted to the circumstances of the particular matter being tested. But, like other noble Lords—possibly it is because of approaching sunset in any event—I am not at all in favour of the sunset clause, which is a kind of confession in advance that you are rather doubtful whether the thing will work. There may be doubts about whether the thing will work, but I do not think that we should put the statute on the statute book under such an impression.
	On conditional fee arrangements, perhaps my noble friend has forgotten that these were initiated by a Government of which he was a Member—they were greatly extended later—with the benefit of the Lord Chancellor's advisory committee to express views about how they were going. Indeed, sometimes the views were adverse to what was being proposed, but we had the benefit of that sort of advice. I would be in favour of some form of provision for monitoring and research, but not the provision of the sunset clause.

The Archbishop of York: I am a new boy here. Is the problem with this clause really subsection (4)? Without that, subsections (1), (2) and (3) make a lot of sense. I have always thought that liberalisation on the whole is a good thing. Monitoring and research into alternative business structures would give assurance to consumers and tell people who are starting them that they will be monitored and researched. I would have thought that that would help.
	I speak only as someone who worked on the Stephen Lawrence inquiry. It was interesting that the Home Secretary said that he would lay before Parliament his action plan on how the recommendations were working. That actually meant that the police were carrying out what was required. Because it was to be laid before Parliament, progress was that much better. I would have thought that this would save people from acting in haste but repenting at leisure. They would know that they were to be monitored, studied and researched, as required under the Act.
	In addition, in terms of consumers, how will you cure the unintended consequences? Being a new boy, I would go for subsections (1), (2) and (3) of the proposed new clause and remove subsection (4). But I do not know how this House works. In the house called the General Synod of the Church of England, it would be possible to remove it.

Baroness Ashton of Upholland: The most reverend Primate may be a new boy, but he is spot on in his analysis of the Government's position. The great joy of your Lordships' House is that we can do whatever we like.

Viscount Simon: Within reason.

Baroness Ashton of Upholland: I am reminded by the Chairman that that would be within reason, and of course we are always reasonable.
	I thank Members of the Committee for the way in which we have talked around this very important amendment. I agree with the sentiments expressed by the noble Lord, Lord Hunt, and other Members of the Committee that it is very important, because it is new, that we know what happens while it develops. Not only should the board know, but Parliament should know. I agree that it would be very valuable to view how things are working out and allow a chance to consider whether further refinements are needed.
	The noble and learned Baroness, Lady Butler-Sloss, and the noble Lord, Lord Thomas of Gresford, talked specifically about whether we could stop alternative business structures and whether we could deal with particular classes of ABS. The answer to both is yes. If a firm's existence is contrary to the regulatory objectives, the licence can be withdrawn. If all ABSs were working contrary to the regulatory objectives, all licensing authorities could be shut down under this legislation. The licensing authorities' power to modify licences applies to any or all within their reach, so if general problems arise general modifications can be made in a specific class or in the generality as a whole.
	I am happy to consider the study and report as proposed in subsections (1) to (3). We may need to make some refinements, so I hope that the noble Lord will allow me to take these subsections away to consider them. I listened carefully to what was said about a sunset clause. Noble Lords spoke of the chilling effect and the difficulties for consumers as well as for investors, and I agree with those arguments. It is difficult to envisage how this would work, particularly given that, after five years, ABS firms could be unlawful. That would greatly inhibit the possibility of their even being set up, let alone being able to develop. However, I realise that part of the intention is to ensure that the Government come back to Parliament to justify what has happened.
	The amendment requires a report after three years, leaving two years with no obligation to do so, and I shall want to look at that. Further, there is nothing to prevent Parliament from conducting its own investigations. My thinking is that perhaps we should have a report after five years, and I am happy to talk to the noble Lord, Lord Hunt of Wirral, about how to structure that. If necessary, legislative changes could then be proposed. While I would not wish to see a sunset clause in the Bill, there should be an opportunity to make changes if they are thought necessary. That is better for the long-term planning of ABS structures and gives greater certainty while dealing with the point that Parliament should be given a chance to review how the development is working. On that basis, I hope that the noble Lord will agree to my proposal.

Lord Hunt of Wirral: I am happy to agree. I thank all noble Lords who have participated in the debate, particularly the most reverend Primate, who has given me 75 per cent of what I am seeking. In fact, I have virtually 100 per cent because the Minister has pointed out that the whole thing could be shut down anyway and therefore would not need a sunset clause. Therefore, I think that this has been a valuable debate. I am grateful to the Minister for what she has said. I will reflect on her words and look forward to working with her in order to bring forward something more meaningful on Report. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clauses 108 and 109 agreed to.

Lord Evans of Temple Guiting: I beg to move that the House do now resume. In moving the Motion, I suggest that the Committee begin again not before 8.35 pm.

Moved accordingly, and, on Question, Motion agreed to.
	House resumed.

Africa: Chinese Investment

Lord Holme of Cheltenham: rose to ask Her Majesty's Government what assessment they have made of the level of Chinese investment in Africa.
	My Lords, the purpose of this Question for a short debate is to draw the attention of the Government and your Lordships' House to the new Chinese scramble for Africa. In preparing for the debate, it occurred to me, perhaps rather impertinently, that although the People's Republic of China and your Lordships' House are very different in their scale and powers, they nevertheless have two characteristics in common. The first is an excessive respect for the political wisdom of elderly men in suits. However, no sooner had I formed this idea when I realised that while no doubt all participants in the debate are characterised by their great wisdom on Africa, the majority by no means conform to the stereotype of elderly men in suits. So that will have to remain dangling as a hypothesis. The other characteristic these two great institutions have in common is a lively respect for their own history, so I shall start with some history.
	The Chinese did not arrive in Africa yesterday with President Hu Jintao's tour. In fact they first arrived in 1414, half a century before the Portuguese and hundreds of years before the other European waves of traders, slavers and colonialists. In 1414, Zhang He, the Grand Eunuch of the Three Treasures, a title that makes British admirals look positively understated, took a fleet of 60 galleons and 100 auxiliary vessels as well as 30,000 soldiers along the length of the east African coast. He came in search of trade, prestige and wild animals for the emperor, who was of course the first of the newly arrived Ming dynasty. Unlike many of his European successors, Zhang He came and went in peace, apart from a skirmish with the people of Mogadishu who were noted in the ship's log as being "quarrelsome". Some things do not change.
	Let me fast forward to the 1960s and the Cold War, when the Chinese returned in strength as missionaries of Mao and allies in various liberation struggles. They built roads, bridges and the TanZam railway swiftly and efficiently in order to reduce the reliance of front-line states on apartheid South Africa. They were always ready to train and arm the leaders of the struggle, competing at that time for dishonour with the USSR and the European members of the Warsaw Pact. There followed a period of relative disengagement until around 10 years ago, when a dramatic new chapter opened in Chinese-African relations. It is no exaggeration to say that the accelerating Chinese drive into Africa in recent years is one of the most significant geopolitical and economic events of our time, involving as it does a search for natural resources and a drive for new markets, accompanied by an orchestration of trade and investment with an underlying quest for global power and influence.
	Today the Chinese are on the move the length and breadth of Africa. They are buying and selling, importing and doing deals with Governments—not least on votes against Taiwan. In some instances, they are selling arms as well as acquiring and then exporting back to China oil and gas, metals and minerals, and agricultural commodities. They are placing their footprint everywhere. The bazaars and markets of Africa are as full of cheap Chinese cotton garments as the British high street, plus everything else that can be imagined from watches to computers, flip-flops to blackboard chalk. No item is too small for the great Chinese economic machine. Chinese hotels and restaurants are opening, as are donated stadiums and radio stations. Chinese medicine is everywhere, and is a great deal cheaper than western pharmaceuticals. Indeed, at the Royal Society of Arts last week I heard a leading Ugandan businessman, Andrew Rugasira, say that it was his belief that within 10 years there would be a Chinese president in one of the African countries.
	What, it may be asked, is the problem, apart of course from wounded western amour propre at seeing a whole sphere of economic and political influence removed so swiftly and expeditiously. First is the problem identified by Thabo Mbeki that the trade flow is too much like the old north/south colonial pattern. Yes, trade between China and Africa doubled from $20 billion to $40 billion between 2000 and 2005 and is expected to double again by 2010, at which point China will be Africa's largest trading partner. But that trade is overwhelmingly in primary commodities. For instance, 25 per cent of China's oil comes from Africa already, significantly most of it from Angola and Sudan. The trade relationship as it stands gives far too little scope for added value in Africa or encouragement of African companies, enterprises and products.
	Secondly, there is a structural imbalance between a superpower like China, with a vast economic machine subject, it must be said, to party and state guidance and direction—what Will Hutton calls in his most recent book "Leninist Corporatism"—and an atomised Africa which is divided into preponderantly small states. At the China-Africa Forum in Beijing in November, this symbolism was apparent: 43 African leaders going up the red carpet to be greeted one by one, with a negligible role for pan-African institutions in the shape of NePAD and the African Union. The plethora of loans, credits and trade deals were strictly bilateral and often ad hominem. It seems this will be the case again on President Hu Jintao's current tour of Cameroon, Sudan, Namibia, South Africa, Seychelles, Liberia, Zambia and Mozambique.
	Thirdly, there is the question of governance. Part of the global consensus, articulated in the Commission for Africa and institutionalised in NePAD, is the express link between economic success derived from foreign direct investment on the one hand and good domestic governance on the other. But the Chinese have shown little or no interest in issues such as the rule of law, free elections, respect for human rights and stamping out corruption. They dish out the loans, the gifts and the pet projects with no questions asked, sometimes supporting and even propping up very dubious regimes under the rubric, which is so important to them internationally, of mutual non-interference. So the infrastructure created and the new loans made may suit the African regimes concerned but may not be in the long-term interests of the host country concerned.
	Fourthly, there is the constellation of issues gathered for progressive western companies, NGOs and Governments under the concept of sustainable development: local content, capacity creation, technology transfer, community consultation and environmental conservation. On none of these issues have the Chinese been particularly engaged. When I chaired a conference on behalf of the Royal African Society in Johannesburg just before the China-African Forum, there seemed to be considerable Africa complacency on these issues. Now the Chinese come bearing gifts and it is difficult to blame them. Although this does not yet appear to be a collective issue for Africans, it does not mean that the rest of the world should stand by mute.
	What should be the response of Governments such as our own, who have taken an excellent lead on Africa, of the large companies involved in Africa and of the relevant NGOs? I believe there is no point whatever in adopting an adversarial approach, snarling at the vigorous newcomer like an old dog in the manger. Our own colonial history precludes too much self-righteousness on our part. The enlightened world community has, by and large, got the right approach at last to Africa and we should now seek to engage the Chinese, first of all as Government-to-Government. I shall be interested to hear the Government's plans for the G8 and whether they intend to raise these matters this summer as a world issue.
	I also say to the Minister that I hope we stop the rapid rundown of diplomatic representation in Africa. If ever there was a time when we need maximum diplomatic representation, it is now.
	I hope major companies do not join a race to the bottom but persist with corporate responsibility and sustainable development and, if anything, raise their game. Companies involved in China and Africa should promote dialogue. I commend de Beers, which has helped to facilitate discussions on codes and standards involving the US as well as the Chinese and Africans. Standard Chartered Bank, which I advise, is active in a similar way in promoting dialogue.
	I hope that developmental and environmental NGOs will be as assiduous in drawing attention to Chinese mistakes as they are in the case of multinationals. LEAD International, which trains people in sustainable development and which I chair, is this March instituting a dialogue between civil society and China and Africa. I think that is admirable.
	The Chinese deserve our respect for their energy and recognition for their new role in the world, but it does neither them nor Africa a service if that respect and recognition is uncritical. Engagement is a two-way process.

Baroness Whitaker: My Lords, I congratulate the noble Lord, Lord Holme of Cheltenham, on securing such a timely debate and on his enlivening and penetrating tour d'horizon.
	China has rebuilt much African infrastructure both as aid and as investment. As the noble Lord said, it manages the extraction of and buys large quantities of raw materials, which contributes hugely to national exchequers, helps producers or backs loans on easy terms. The style of negotiation of all this seems to be congenial, with few or no conditionalities and long credit lines, and I know of African leaders who admire China's big leap out of poverty and would like to learn how to emulate it.
	There are also some adverse consequences, as the noble Lord said; I think I agree with absolutely everything he said, so I hope not to repeat him in too boring a way. In some countries which already have massive unemployment, over 70 per cent of the workforce for this rebuilding is Chinese. Tensions have been reported in Zambia over this. I agree again with the noble Lord that there is a real risk of reinforcement of African economies as predominantly reliant on the production of raw materials, whose price they cannot control, with attendant commodity price shocks or damaging currency appreciation, at the expense of their fledgling manufacturing, processing, value-added export production and associated skills development, all of which could be, and in some cases are being, substituted by cheaper Chinese products in both domestic and potential export markets. Plentiful commerce in Chinese goods takes place in Africa, not only through the formal sector but also through the very significant informal sector with its large, vibrant markets.
	The Beijing declaration of the Forum on China-Africa Co-operation of last September is, all the same, a hopeful and positive document, but there is one problematic sentence, which states that,
	"the politicisation of human rights and the imposition of human rights conditionalities on economic assistance should be vigorously opposed as they constitute a violation of human rights".
	Whatever that means, the fact is that China's immense achievement in rebuilding Africa's infrastructure does have this disturbing facet. For instance, a large proportion of the 23 per cent of China's oil that comes from Africa is from Angola, which I visited last September. Last year it seems that $14 billion accrued from oil revenues. But there is a mystery about this. The Government of Angola's poverty reduction programme does not seem to be very developed. Forty-five per cent of its children are malnourished. Primary education is far from universal. Where does the $14 billion go?
	One obvious way forward is for the oil companies to declare their payments so that people can ask the Government how the money is to be spent. The UK Government's Extractive Industries Transparency Initiative was designed to achieve exactly this. Moves were afoot for Angola to take part, but very little has happened for a year or more, effectively since China—through its parastatal organisation—became the major customer. If there is insufficient transparency in the accrual and use of these very large revenues, the embryonic democratic institutions of Angola lose their best weapon in the struggle to halt poverty. Others may mention China's role in Darfur.
	So how should we approach all this? First, African Governments themselves have opportunities which we can support. As an interesting new booklet from the IPPR, The New Sinosphere, points out, in China the accelerating movement of people from the countryside to the cities may mean that less food will be produced. Many African Governments have the sound intention of developing their agriculture, both for food security and for economic growth. If African agriculture can advance and become more highly skilled—more angled to producing the final processed food—this could supply future Asian needs, as well of course as enhancing trade in general. The IPPR also mentions the African potential for developing tourism.
	Secondly, we should realise that China gives every intention of being in it for the long haul, and of wishing to be a world player within international institutions such as the WTO, and within alliances. So there is more than one forum where shared concepts such as environmental protection and transparency can be developed. The Beijing declaration shows sensitivity to such concerns. There is also a commitment to NePAD and to the peer review system. It seems that China may be interested in supporting the principles of the EITI.
	How do our Government engage with China? Is there an integrated strategic aim of supporting stability, governance and growth in Africa? Do we talk to business and to the banks about this? Do we set up joint ventures, especially in agriculture, which the Beijing declaration recognises as a need? Can these support good governance, skills and technology transfer and capacity-building, and poverty reduction essentials such as adding sanitation and piped water systems to the physical infrastructure and assistance on primary healthcare delivery?
	Could the Africa Partnership Forum, a body charged with implementing the Gleneagles commitments, be persuaded to invite China to join? I know DfID wants to encourage China to join one of the Africa Commission's other children, the Infrastructure Consortium for Africa, but is DfID also offering assistance to Governments on how to negotiate the best deal?
	Finally, in the area that perhaps most holds up African economic and social development—conflict reduction—I am sure we welcome the Chinese contribution to UN peacekeeping and their explicit commitment to small-arms reductions. How can our Government build on this to help reduce conflict?

Lord St John of Bletso: My Lords—

The Archbishop of York: My Lords, I am grateful to the noble Lord for securing this debate. Let it not be said that the debate is taking place because a former colonial power is worried that it is going to lose trade. The issues he raises—

Baroness Crawley: My Lords, with respect, perhaps I could just guide the most reverend Primate. He may like to make his remarks in the gap before the Front-Bench spokespersons. I am sure we will be delighted to hear from him then.

Lord St John of Bletso: My Lords, I too thank the noble Lord, Lord Holme of Cheltenham, for introducing this short and very topical debate this evening. I have a particular interest in this debate, not just because of my long-standing interests in Africa, but because I studied Chinese law at London University, and spent some time living in China.
	There is no doubt, as China seeks energy, steel and mineral resources to feed its insatiable appetite for growth, that Africa faces great opportunities for both development and investment, but also a potential threat of exploitation reminiscent of the colonial era. I noted that the noble Lord, Lord Holme, made mention of President Thabo Mbeki's speech in Cape Town in which he said that it was up to Africa to ensure that it had a major say in deciding the terms of China's trade and investment with Africa. It would serve little purpose if the only return for Africa's valued energy and mineral resources was a limitless supply of cheap manufactured goods. That particularly affects the textile industry.
	In President Mbeki's word, the African continent could be condemned to "underdevelopment". It is vital that with Chinese trade and investment comes training, beneficiation of minerals in the country of origin and a whole range of value-added activities. While President Hu Jintao undertook to train 15,000 African professionals and set up a development fund to help build schools and hospitals, the proof will be in the delivery.
	Far from being marginalised by an increasingly globalised economy, as was the fear a few years ago, there is a lot for the African continent to be positive about. It is now emerging as an increasingly important global player with its energy, minerals and hydro-electric potential. Sub-Saharan Africa is now showing sustained growth of just over 5 per cent, while Angola, where China accounts for 35 per cent of its exports, has a growth rate in excess of 20 per cent. Sadly, though, that has not passed down in terms of poverty reduction in that country.
	The substantial increase in trade and investment from China and India in Africa has certainly played a major part in reducing the blight of unemployment, but a major grievance of many Africans working for Chinese companies has been their poor record on safety standards, their lack of social benefits and low wages, and their tendency to import Chinese labour to work on many of the major infrastructure projects. In Zambia riots broke out in July last year following a dispute over alleged late payment of wages, and trade unions in the dispute claimed that miners at the Chinese firm earned the lowest wages in the industry.
	While many African leaders and commentators have welcomed President Hu Jintao's pledge to double both aid and trade with African nations following the China/Africa summit in November last year, the question on many people's lips is, of course: at what cost?
	There is growing alarm that China is prepared to support repressive African regimes, such as Sudan and Zimbabwe. China's long-standing mutual non-interference policy, where Chinese aid and investment deals come on a no-strings basis free of conditions, goes totally against the precedent set by most western countries on the maintenance of democracy, respect for human rights and social and environmental standards. In both Sudan and Zimbabwe, China has been accused of supporting human rights abuses by providing military support to the regimes. One of the concerns I have, following the ever increasing tide of Chinese investment in Africa, is that western nations will increasingly lose influence on the continent, in terms both of access to future raw materials and of political influence.
	In conclusion, while I have severe reservations on the modus operandi of Chinese investment in Africa, it is clear that many African countries have benefited from Chinese economic growth. I hope, however, that when the Minister closes this debate, she can enlighten us on whether these concerns will be raised by our Government at the forthcoming G8 meeting, and on what ongoing negotiations there are to address some of the concerns raised this evening.

Lord Jones of Cheltenham: My Lords, I too congratulate my noble friend Lord Holme of Cheltenham on securing this important debate and on the lucid and comprehensive way in which he covered the difficulties associated with China's current activities in Africa. This is, I believe, the first time that two Lords with the words "of Cheltenham" in their titles have spoken in the same debate. I cannot match the fluency of my noble friend, but I should perhaps explain that Cheltenham has twinning links with both China and Africa, with the town of Weihai in China and Kisumu in Kenya.
	China, as we have heard, has been active for a long time in Africa, particularly since the 1960s in the struggle against colonial rule and then the apartheid regimes in South Africa and Rhodesia. I am currently reading a fascinating biography of one of the great early presidents in newly independent Africa, Seretse Khama, the first president of Botswana. Perhaps at this stage I should draw attention to my registered interests in Botswana.
	In their book, Seretse Khama, 1921-80, Neil Parsons, Willie Henderson and Thomas Tlou devote a section to China's involvement in Africa including the building of a railway line in Zambia and Tanzania in the 1970s. During that period, many African leaders were invited to visit China. Seretse led a Botswana delegation to Beijing in 1976. Apart from seeing developments in China and attending and speaking at events, the team obviously had an informative, enjoyable and sometimes exciting time. On page 333 of the book, it is recorded that the Botswana delegation was the first in a long time which was not presented to Chairman Mao, who was ill and died 40 days later. The authors then write:
	"That night, after feasting and drinking, the Botswana delegation went to bed tired and tipsy. At 3.45 in the morning a series of earth tremors, of two minutes' duration each, hit Beijing. Then there was a massive earthquake which reached 8.2 on the Richter scale, rocking a wide area of north-east China. Its epicentre was 150 kilometres to the south-east of Beijing—in the area that the Botswana delegation was due to visit next. Several buildings collapsed in the city of Beijing and thousands of people fled into the streets. Seretse and Ruth (the President's English wife) were kept awake by the earth movements, as were all other members of their party, save one. Festus Mogae, Botswana's chief economic planner, woke up to experience his room's dizzy movement. He concluded that he had consumed too much Chinese wine, and turned over to slumber on until dawn".
	Festus Mogae is now, of course, President of Botswana, and a more sober person it is difficult to imagine.
	China has been involved in Africa for a long time. In the 1970s, it was to support the struggle for liberation; now the advantages for Africa are not quite so obvious, although China's priority is clear: to create a diplomatic environment that facilitates secure and stable access to commodities. Energy assets rank highest on Beijing's wish list, but metals and minerals, precious stones, timber, farm products and seafood are not far behind. On the website of the Forum on China-Africa Co-operation—FOCAC—there is a statement of China's African policy. I have read it and there is little in it which is objectionable.
	There are still high level visits in both directions. FOCAC claims that in the latest aid package, China offers,
	"preferential loans, debt exemptions, favourable tariff policies as well as training of personnel".
	This is having some effect on hearts and minds. For example, according to Business Day of 2 February 2007, in a recent statement President Mogae said:
	"I find the Chinese treat us as equals. The west treats us as former subjects".
	Artwell Karuru, a reporter working for the Zimbabwean presidential office, says that China's assistance to Africa is,
	"sincere, selfless and without conditions",
	and that it has brought about "concrete benefits" to African countries and people. I am sure that part of this is true. One example is a new 1,400 kilometre railway in Nigeria, which China will help to build with an investment of $8.3 billion. But China is particularly active in countries where there is conflict or where the regime is violating human rights—something of which China has been guilty for some time. Zimbabwe and Sudan are two areas of high Chinese activity. And there are conditions; for example, that countries must not recognise Taiwan.
	Noble Lords will have seen the article in yesterday's Guardian by Chris McGreal in Lusaka, headlined "Thanks China, now go home: buy-up of Zambia revives old colonial fears". In the article there are complaints that Chinese companies are competing aggressively for business in Zambia. There is nothing wrong with healthy competition on a level playing field, but the article says:
	"China put up the money to build Zambia China Mulungushi Textiles and provided the expertise to run it. It grew to become the biggest textile mill in the country... employed more than 1,000 people, propped up the economy of Kabwe in northern Zambia and kept thousands of cotton growers in business. But last month the factory shut down production, strangled by a new wave of Chinese interest across Africa that some critics say amounts to little more than another round of foreign plunder as Beijing extracts minerals and other natural resources at knock-down prices while battering the continent's economies with a flood of subsidised goods and surplus labour. Also in Zambia, two years ago 49 miners were blown up in an explosives factory at the Chinese-owned Chambishi mine in an accident blamed on lax safety. Last year police shot five miners at Chambishi in a riot over working conditions".
	I have heard similar complaints in Botswana. In the construction industry the story is that Chinese companies are hoovering up nearly all the business, threatening the survival of existing local companies and their employees—companies built up over many years. The view has also been put to me that, rather than employing local labour, the Chinese are bringing in their own labour and materials, much of it sub-standard, to undercut local companies. There is no doubt that there are strains caused by China's activities in Africa.
	The Institute for Public Policy Research, in its document The New Sinosphere—China in Africa, suggests that western policy must change, for example to lower or abolish tariffs to open our markets to products from Africa. The IPPR also has something to say about the OECD Convention on Combating Bribery of Foreign Public Officials which it says "contains serious loopholes". I recommend that noble Lords find this document on the internet.
	I will be interested to hear from the Minister what our Government intend to do to adapt UK policies to meet the challenge of China's growing influence in Africa.

The Archbishop of York: My Lords, I apologise for jumping the gun. I did not mind the gap because I did not have the speakers list.
	I am grateful to the noble Lord for raising the question. It must not be perceived outside this House that the old colonial power begrudges the trade that is taking place. It is something far more serious; as President Mbeki has said, trade is a two-way system. For a long time Her Majesty's Government have been working towards trade justice and all that work could easily be lost overnight if such things are not observed. Suddenly China is affecting the textile industry in Zambia, and all the work that DfID has done there to help could be overrun.
	Governance in Africa is still a concern; the rule of law needs to be obeyed and observed and the question has to be whether the Governments of Africa will simply take whatever China offers because it looks good for the time being. What about the wonderful work in cancelling world debt? Again, Her Majesty's Government have been in the forefront of that; will they watch that the new Governments of Africa do not create fresh indebtedness, so that in a few years' time we find that the campaign has to start all over again.
	I happen to believe that poverty in Africa affects a lot of children particularly. As Africans say, it is better to teach a person to fish than to give them a fish, because the chances are likely that they will get their economy going properly. Her Majesty's Government have assisted countries in Africa, teaching them how to fish without necessarily just giving the fish. The Chinese are arriving, giving a lot of fish but they need to teach the business that is required.
	What about child soldiers in Africa? Arms could easily be shipped from China and a lot of unscrupulous Governments could still turn their African children into child soldiers. Participation and representative democracy are crucial. All the work that has been done by Her Majesty's Government in Africa should not overnight be thrown over.
	Her Majesty the Queen is to visit Uganda in May to open the Commonwealth leaders' conference. Will Her Majesty's Government ensure that the assessment they have made of the level of Chinese investment is discussed at the Commonwealth leaders' conference in Uganda?

Baroness Northover: My Lords, I too thank my noble friend Lord Holme of Cheltenham for securing this debate. As we have heard, it is an area with massive significance to which far too little attention has yet been paid. As ever, he is very prescient in identifying it and very perceptive in his analysis of it.
	China's presence and investment in Africa continue to grow. That is, of course, not necessarily a bad thing, as we have heard. After all, decades back, it was China that was in dire poverty and now we see it powering forward through trade and industrial growth, beginning to take at least some of its people out of poverty, and many more if its expansion continues at its current rate. India is following suit. People used to despair of poverty and over-population in Asia. Now we talk of the Asian tiger economies.
	We all know that aid and debt relief will not in the end bring African countries out of poverty and that it is only by increasing trade and expanding their economies that they too will flourish. China could greatly assist with this process. It is welcome that China has increased its contributions to peace-keeping forces in Africa and support for the developing African Union, but people are very apprehensive of its rapid expansion in Africa. Part of our fear may well be that after a long period of being able to influence what happens in Africa, this is slipping from our grasp. Yet there are real reasons to be deeply apprehensive about what is happening, as all noble Lords have made extremely clear.
	There are several levels to this: economic, political and diplomatic. At the end of 2005, China was Africa's third largest trading partner after the US and France. Its trade volume has increased tenfold in seven years. About a third of China's oil now comes from Africa. Not surprisingly, given that nations act out of self-interest, China has focused particularly on resource-rich nations. Its involvement is not necessarily bringing benefits to the wider economies of these African countries. Does that sound familiar? We should think of the railway lines in Africa—not serving the continent but there to bring resources to the coast for transport to Europe. It is very worrying if the same thing is happening again.
	Of absolutely key importance is the fact that cheap Chinese manufactures are flooding African markets, pushing out African producers. We heard about the effect of that in Botswana from my noble friend Lord Jones. But we are still dumping cheap products from the EU in developing countries and we have to take action there.
	China has opposed American special treatment for Africa. According to WTO rules, China would have to agree a waiver for these preferences to continue, which are of vital importance to many African countries. Then there are the human rights and governance issues that we have heard about, where China's record is hardly the best. Trying to lever good governance in Africa in the way that we have begun to do is simply not on its agenda. World Bank President, Paul Wolfowitz, complains that China ignores human rights and environmental standards when lending to Africa. Chinese firms have ignored international initiatives to make the mining industries cleaner. There is also the concern that with the level of natural resource extraction not only will Africa be exploited, as it always has been, but that it will be left with a great deal of environmental damage.
	Chinese arms transfers to conflict zones, support for repressive regimes, and its blocking of UN resolutions on Darfur are all extremely worrying. The international community needs to encourage China to support efforts to promote stability and reduce the risk of conflict in Africa, for its own long-term interest as well as those of the African peoples whom it may be damaging.
	On the political and diplomatic front, we are familiar with US aid being tied to support for US foreign policy or use of US companies and with the Americans calling in those countries to support them in the UN; for example, on Iraq. China is learning to play the same game. China stresses that it has never colonised any part of the African continent and states that it has supported a number of African independence movements against their western colonial masters. China's "engagement agenda" in Africa consists of a long list of foreign policy interests, including that African states adhere to the "one China" policy—that is, to sever diplomatic ties with Taiwan—and to improve co-operation, in particular in the United Nations. Thus China calls in African support for the positions that it takes in the UN. It is unpredictable where that will take us all.
	Most importantly, all of China's interest in African countries is accompanied by guarantees that national sovereignty will not be questioned. This "no strings" approach enables Chinese companies to operate easily in countries such as Sudan and Zimbabwe, with terrible effects. The sale of arms to those countries is deeply alarming. Clearly, the relationship between Africa and China is unequal, just as was Africa's relationship with Europe and the US, and still is. Clearly, Africa may be trading its present for its future.
	As the IPPR report, to which the noble Baroness, Lady Whitaker, referred, concluded:
	"China represents opportunities and risks for Africa. Managed well, China could bring real development benefits to Africans ... Managed badly, however, China's role in Africa may lead to worsening standards of governance, more corruption and less respect for human rights".
	We will have to be extra vigilant that our engagement with Africa follows the laudable lines that we wish on the Chinese. What we see developing there now is deeply concerning, and the West will need to do its best to convey to African nations the limits of the benefits that they think they are gathering. We will need to impress on the Chinese the need for stability, good governance and development in the long term interests of all. I therefore look forward to hearing what proposals the noble Baroness has to address these problems.

Baroness Rawlings: My Lords, I, too, add my congratulations to the noble Lord, Lord Holme of Cheltenham, on securing this interesting and important debate on what he called the new scramble for Africa. As your Lordships have highlighted, it could not be more timely, considering the Chinese President's—Mr Hu Jintao's—current eight-nation tour of Africa; a continent which he already knows well from two previous visits.
	We all recognise that trade and investment are crucial for Africa and African economies, and there can be no doubt that commodity-hungry China is winning friends, but the question is to what extent is—or, indeed, should—China be influencing people? China's drive to buy African oil and other commodities has resulted in a big increase in two-way trade, worth $42 billion in 2005. As those of us who were awake early enough heard on the BBC this morning, China now imports more oil from Angola—38 million tonnes—than it does from Saudi Arabia, and its share of sub-Saharan trade is expected to double by 2010. In return, the People's Republic has pledged to double its aid to the continent and to provide $5 billion in loans and credits over the next three years. Mr Hu Jintao has unveiled $1.2 billion of immediate trade and investment deals, money which, China's Ministry of Commerce reiterated last week, comes free from any political conditions.
	At the Beijing summit at the end of last year, the Chinese President told the assembled African Heads of State and Ministers:
	"China will forever be a good friend, good partner and good brother of Africa".
	The list of "friends" to whom many of your Lordships have referred would not look out of place in a rogues' gallery. The Foreign Affairs Select Committee report on East Asia points out:
	"China is a close ally of Zimbabwe, despite the terrible abuses committed by ... Robert Mugabe".
	Indeed it is all too easy to argue that investing in chromium production and continuing to sell products such as the technology that enables the monitoring of electrical communications, despite expressed and growing concerns, is support of the Mugabe regime and all that it does, albeit by proxy.
	Omar al-Bashir, Sudan's President, is another "friend". As the debate has highlighted, China not only buys around 80 per cent of Sudan's oil exports, making the favoured few very rich, but has effectively been shielding Sudan from being held to account in the UN Security Council, to the distress of all aid agencies. As your Lordships are fully aware, Sudan is responsible for one of the largest—and escalating—atrocities of recent times. I need not remind the House that conflict in Darfur has to date left an estimated 300,000 people dead and 2 million displaced. Can one really argue that trade and investment is free from political conditions if a country uses its veto?
	Last week's Economist put the situation starkly, stating that,
	"as Khartoum booms, Darfur bleeds".
	It argues that the liberal Chinese stance has in this case been exploited as a "licence to kill", an example of profit without honour.
	On the one hand you could argue that the People's Republic's growing interest and involvement is good and something to be encouraged. It is helping to fuel the economic rise of African nations and building up the continent's neglected infrastructure. However, in supporting its "friends", China's policies have not only helped to prop up some of the continent's worst human rights abusers but weakened and undermined the leverage of the international community and the UK in trying to promote good governance and human rights.
	The East-West Center think tank tries to argue that,
	"as a late entrant to the international oil game, China has little choice but to strike deals with the so-called rogue states".
	Perhaps Her Majesty's Government could urge the Chinese to put some pressure on Sudan. Mr Hu has a rare opportunity to combine self-interest with statesmanship.
	There is a fine balance to be struck. As China's economic interests and dependencies spread, as no doubt they will, China will need to remember the importance of investing in peace as well as pipelines. Free markets, good governance and promotion of sound and stable human rights are the most direct route to a development that enables prosperity and a stable society.

Baroness Royall of Blaisdon: My Lords, this has been an excellent and timely short debate. I thank the noble Lord, Lord Holme of Cheltenham, for enabling us to discuss these important issues. I am grateful to him also for providing a historical perspective. Napoleon Bonaparte said:
	"Let China sleep, for when she wakes, she will shake the world".
	China's re-emergence as a great world power is having a profound global impact, not least in Africa. As this impact deepens, our interest in the kind of international actor that China is becoming grows ever greater.
	As we have heard, China's overall influence on Africa has been increasing dramatically. Its footprint is everywhere. We welcome the growing engagement and believe that China's role in Africa is extremely important. However, we want to help to ensure that China's impact becomes even more beneficial for sustainable development and poverty reduction in Africa. As the noble Lord, Lord St John of Bletso, said, Africa needs development, not under-development. We want to help to ensure that engagement in supporting the new African agenda is led by Africans—the NePAD agenda of democracy, transparency, peace and market. We can do that only by constructive and strategic dialogue with China.
	The most striking aspect of China in Africa is how quickly its role is evolving. Trade and investment are the driving forces of Chinese engagement. In 2006, China/Africa two-way trade reached $55.5 billion—up 40 per cent on the previous year. The balance of trade was $2.1 billion in favour of Africa. Two-way trade is projected to reach $100 billion by 2010. Since 2004, China's investment in African infrastructure has been greater than that of the total for OECD countries. China's emergence as a donor to Africa has widened the choices available to African countries. We welcome that development.
	Political relationships are moving apace. In 2006, China published its first White Paper on Africa; President Hu and Prime Minister Wen both visited Africa; and in November there was the China/Africa summit in Beijing. A number of key Chinese commitments were announced at the summit. They included the doubling of aid by 2009, providing concessional credits of $5 billion, establishing a $5 billion fund to support Chinese investment in Africa, cancelling debt due in 2005 for low-income countries, and tariff reductions. I can certainly assure the most reverend Primate the Archbishop of York that we will carefully monitor the debt situation.
	In respect of the Commonwealth Heads of Government Meeting in Uganda, I shall feed the views of the most reverend Primate to my noble friend Lord Triesman. So far as I am aware, the agenda has not yet been set. However, I am confident that China/Africa will be a subject of discussion in this as in many other multilateral fora.
	The overall theme of the Beijing summit was "Amazing Africa: a continent of opportunity". China very much accentuated the positives. That was very different from the tone of the Gleneagles summit, where we emphasised the approaches that the international community and Africa need to take to achieve poverty reduction. However, we do not believe that those emphases are contradictory. Africa is, and should increasingly be, a continent of opportunities for Africans and foreign partners. But long-term economic opportunities depend on peace and security, sound economic and political governance and a focus on sustainable development and poverty reduction. I rather liked the analogy of the noble Baroness, Lady Rawlings: we want peace as well as pipelines.
	China's economic engagement has many positive features. It has boosted growth rates, improved trade balances, increased government revenues and provided cheap goods for African consumers. But with opportunities come important challenges. Chinese exports compete with African products in African and overseas markets. There have been concerns about Chinese loans neutralising debt-relief efforts by the UK and other OECD countries. There are also issues of environmental impact, transparency and the appropriateness of some Chinese infrastructure projects. China's approach is built on her stated policy of non-interference in internal affairs, and that must worry many of us.
	Then there is Darfur and Zimbabwe—subjects that were raised by many noble Lords, including the noble Baroness, Lady Rawlings. As my noble friend Lord Triesman said last week in your Lordships' House, China is now a great world power and with that comes a responsibility which goes further than commercial interests. This week, President Hu held private talks with President Bashir about the critical situation in Darfur. I am confident that he delivered strong messages about the urgent need to resolve the crisis. I hope that the messages will be heard and heeded.
	Clearly, there are some differences in our approaches towards Africa, but it is crucial that all African partners support Africa's own commitments to sustainable development, including good governance and sound economic management. That is in the long-term interests of Africa and its partners, including China. Stable, well governed and prosperous countries make the best trade and investment partners. Zimbabwe, where Mugabe and his regime are destroying the economic base and destroying lives, where infant mortality is accelerating and where the average life expectancy is 37 years for men and 34 years for women, is perhaps the starkest example of where we hope that China can be more supportive of international efforts to encourage reform. As in Sudan, this is the right thing to do, but it is also in China's self-interest to play by the international rules.
	The most effective way to address our concerns is to work closely with China so that all our efforts support our common aspirations for development in Africa. The Government have undertaken a range of activities to do that. In 2005, the Prime Minister invited a Chinese representative to sit on the Commission for Africa. China's engagement in Africa regularly features in ministerial contacts with the Chinese. In 2006, DfID hosted a delegation from China that reviewed how the UK manages its overseas development assistance. We invited the Chinese to observe the Development Assistance Committee peer review of DfID last year.
	My noble friend Lady Whitaker and the noble Baroness, Lady Northover, rightly spoke of the need to engage with China to better support stability, governance and growth in Africa. The UK and China have recently agreed to meet at a senior level every six months to discuss international development issues and Africa. We have extended an open invitation to the Chinese to learn from our experience of providing ODA, and the EU and China have agreed to a structural dialogue on Africa.
	China knows that the international community has a legitimate interest in the development of Africa and that this has a wider resonance in China's own aspirations to play a responsible role in the global economy. The German G8 presidency has a focus on Africa and development, and as part of the G8 outreach programme China will be fully engaged on the Africa agenda by all G8 members.
	We have used the high-level dialogue that we have established so far to stress the importance of good governance and sound economic management; to encourage the Chinese, who are strong supporters of the MDGs, to support more directly the poverty reduction programmes developed by African Governments; to take a more multilateral approach; and to join with the international community in tackling poverty.
	We are encouraging the Chinese to endorse the principles of the Extractive Industries Transparency Initiative and to join the Infrastructure Consortium for Africa. At a meeting of the consortium last month in Berlin, held under the auspices of the G8, China participated for the first time as an observer. We very much hope that it will join soon. That is a very good example of the way in which we believe China is moving. At a meeting of the consortium last July, held in Addis Ababa, China sent a third secretary who played no role, but now its engagement is increasing and it really is participating.
	Many noble Lords have spoken of the vast Chinese investment in physical infrastructure. Just this morning, at a meeting in your Lordships' House, the extraordinary Wangari Maathai spoke of the Chinese-financed and built roads in Kenya. The roads are welcome, but cheap labour from China is not. That was graphically described by the noble Lord, Lord Jones of Cheltenham, when he spoke about Zambia and Botswana.
	Transport infrastructure is particularly important for land-locked countries and investment in roads and bridges will help to stimulate further growth between African countries. Although that is an area that is still undeveloped for many economies on the continent, we want to ensure that the kind of infrastructure being provided is the kind that Africa needs, not just the Chinese. We are encouraging both the Chinese and African sides to pay more attention to the monitoring and evaluation of the commitments that the Chinese have made to Africa. We have approached a number of Chinese embassies in Africa and invited them to join established donor co-ordination groups. We are encouraging other OECD countries to have similar discussions.
	China is already having a huge impact in Africa, and it will be increasingly important for development in Africa. That view is shared by African leaders, who understandably have strongly welcomed Chinese trade, investment and aid. However, if we are to achieve our shared objective of making Africa a driving force in the world economy and thus helping millions out of poverty, it is in our mutual interest and to our mutual benefit that we work together locally and globally to that end. The Government will therefore continue to build relationships with China so that the opportunities created by China's rise have the maximum impact on sustainable development and poverty reduction in Africa.

Baroness Crawley: My Lords, I beg to move that the House do adjourn during pleasure for five minutes.

Moved accordingly, and, on Question, Motion agreed to.
	[The Sitting was suspended from 8.33 to 8.38 pm.]

Legal Services Bill [HL]

House again in Committee.
	Clause 110 [Overview of the scheme]:

Lord Kingsland: moved Amendment No. 109:
	Clause 110, page 60, line 1, at beginning insert "Subject to certain exceptions,"

Lord Kingsland: I shall speak also to Amendments Nos. 137 to 139. Amendments Nos. 114A and 129A in the group have been tabled by the noble Lord, Lord Whitty.
	Amendments Nos. 109, 137 and 139, in sum, provide for the delegation of complaints handling to an approved regulator by direction of the Legal Services Board. When such a direction is given, the approved regulator would be empowered to award redress to the complainant, which is currently prohibited by Clause 154. The Legal Services Board would continue to have power to vary or withdraw a direction although, in deciding whether to give, vary or withdraw, it would be bound to act compatibly with the regulatory objectives of the Bill.
	The intended system is described in Part 6, which sets out provisions for the establishment of a new independent complaints-handling body, the Office for Legal Complaints—the OLC. The OLC is not the first port of call. All legal service providers will be required to establish an in-house system for dealing with complaints. If that system responds to the complainant satisfactorily, matters will end there. If not, the second stage is activated, and that is the stage that involves the OLC. It will consider complaints that have not been satisfactorily dealt with by the in-house arrangement. Under Part 6, it is intended that the OLC will investigate consumer service complaints, but will refer complaints about misconduct to the approved regulator. However, as the Bill is presently drafted, the approved regulator will no longer have the power to award redress, even in respect of complaints about conduct. This structure is of particular concern to the Bar, which considers it inappropriate.
	The vast majority of complaints against lawyers concern solicitors. That is not really surprising since there are about 115,000 solicitors, but only 14,000 practising barristers, and solicitors are most intimately involved with clients; so one would expect the volume of complaints to be higher. However, the proportions are startling: something like 85 per cent of complaints are about the conduct of solicitors. The number of complaints against barristers is typically well under 1,000 a year, and the total cost to the Bar for dealing with them is little more than £500,000 a year. The Bar estimates that, in future, complaints will account for no more than about 3 per cent of the work of the OLC.
	The principal difficulty about complaints against members of the Bar is that in about three-quarters of cases it is extremely difficult to distinguish between complaints that involve inadequate professional service and complaints that involve misconduct. We share the Bar's view that the approved regulators should be in a position to deal with both aspects at the same time. There are a number of reasons for that. It is inconvenient for consumers to have to deal with two different bodies regarding different aspects of a single complaint. It would also be confusing, as the noble and learned Baroness, Lady Butler-Sloss, pointed out at Second Reading, if one body accepts the facts to which the complaint related but the other did not. In any case, there is bound to be duplication of work and the potential for inconsistency of treatment.
	There can be no question about the high standards that the Bar has met so far in dealing with complaints. That has been endorsed on more than one occasion by the Legal Services Ombudsman. She was reported, for example, in the Lawyer of 20 March 2006 at page 18 as saying:
	"There are substantial delays in the way the Law Society handles its casework. The Bar Council is better at it. I think the Bar Council continually tries and reviews and improves on its processes. Invariably I find it does what it has said".
	The Legal Services Ombudsman in her annual report for 2005 said that the Bar Council achieves a very high rating from her office,
	"one that is substantially higher than that of other professional bodies".
	She concluded:
	"The Bar Council seeks to ensure not only that it is complying with its own procedures, but that it offers a fair, consistent and good-quality service generally to the consumers who use its services".
	Those findings were again echoed in her most recent annual report, when she commented that:
	"The Bar Council continues to deliver good results in respect of speed of service"
	and that the number of investigations with which she is satisfied has risen to 88 per cent.
	Apart from the high quality of the disciplinary service that the Legal Services Ombudsman finds the Bar disciplinary authority attains, there is the distinct, though linked, question of cost. At the moment, a very substantial input into the Bar's investigation is made by well established qualified barristers at no cost to the investigation. By contrast, if the investigations are undertaken otherwise, it will often be by persons who are not legally qualified, and who may not be able to distinguish issues which a qualified person would. I believe that the noble Lord, Lord Borrie, addressed that matter at Second Reading. In the absence of the delegation recommended by the amendment, it is clear that the Bar would be involved in a great deal of extra expense. So, in addition to the high quality of the approved regulator in the Bar's case, it will also be a much more economical system to operate.
	Amendment No. 109 is a paving amendment for Amendment No. 137, which will insert a new clause after Clause 139 providing for the delegation of complaints handling to an approved regulator by the direction of the Legal Services Board. Amendment No. 138 will amend Clause 154 to protect the position of consumers whose complaints are outside the jurisdiction of the legal ombudsman's scheme. That is inserted because the Bill excludes any corporate or quasi-corporate complainant from the scheme, which seems to us unjust. Amendment No. 139 complements Amendment No. 137, amending Clause 154(1) to enable an approved regulator to award redress to a complainant, which Part 6 otherwise prohibits.
	In conclusion, I ought to remind the Committee, although I am sure that it already has it in mind, that the Joint Committee recommended that the OLC should have the power to refer service as well as conduct complaints to an approved regulator where it considered it appropriate. I beg to move.

Baroness Butler-Sloss: I support the noble Lord, Lord Kingsland. He rather stole the words that I might have used, which I used previously. Of course, I declare an interest as having been at the Bar and a judge. He made the point that there is no question about the high standards of the Bar.
	I am very concerned about the hybrid nature of the complaints that will come to the OLC. Some will be on discipline; some will be seeking redress. It is extremely difficult to differentiate between them. Indeed, I am told that about 70 per cent of the complaints have been hybrid. We have the great problem that there will be the same facts, possibly two bites at the same cherry with two different organisations—the approved regulator and the OLC—dealing with the same case. There is always the possibility of different conclusions.
	I am not for one moment suggesting that the OLC is or should be obliged to delegate, but it seems entirely appropriate that, as the amendments suggest, the OLC should have the power to delegate as and when it chooses. Not to have that power seems to me to constrain the OLC quite unnecessarily. Clause 154 has that specific effect.
	As the noble Lord, Lord Kingsland, said, there are real cost implications to that. The OLC has a vast task. I hope that solicitors in the Committee will accept that the vast task largely relates to the very much larger body of lawyers who are solicitors. It will be sensible from time to time to delegate, rather than bringing the extra cost of buying in the expertise of the Bar under Schedule 15, paragraph 15, which states:
	"The OLC may make arrangements for such persons as it considers appropriate for assistance to be provided to it or to an ombudsman".
	If I may say so to the Minister, the crunch words are:
	"Arrangements may include the paying of fees to such persons".
	As I understand it, the noble work done by the Bar on the regulation of its members is done either without cost or at a relatively low cost. It will not be a low cost if the lawyers are bought in. That is a power that the OLC, dealing, as it will have to, with solicitors, might find an extremely valuable adjunct. I respectfully say that Schedule 15, paragraph 15, will not meet the case, so I strongly support the amendments.

Lord Carlile of Berriew: I too support the amendments, other than those tabled by the noble Lord, Lord Whitty, which as I see it are inconsistent with those to which the noble Lord, Lord Kingsland, and the noble and learned Baroness, Lady Butler-Sloss, have spoken. In addressing this issue, I shall compare the disciplinary procedures of the Bar with those of the medical profession and those for solicitors. I should say in that context that, on two occasions, which I shall mention in a few moments, I have represented barristers who were the subject of significant disciplinary procedures. I spent 10 years as a lay member of the General Medical Council between 1989 and 1999, and sat throughout those 10 years on one or both of the professional conduct committee and the health committee, which has procedures analogous to the professional conduct committee. I have also represented solicitors on several occasions by advising them when they have faced proceedings before the solicitors' disciplinary system.
	I shall talk about those two latter bodies first. My experience of the General Medical Council was that, although it was thorough, it was extremely legalistic. It operates its disciplinary procedures just like a criminal court. There are paid advocates on both sides. There is also a huge legal back-up system that includes in-house lawyers and out-of-house lawyers, whom the General Medical Council in effect employs—it certainly pays for them. Every case is fought as though it were a Crown Court criminal trial. Delays are endemic in the system, which is cumbersome, and despite the GMC's efforts to reform that system, it has become ever more legalistic.
	I have not appeared before the solicitors' disciplinary system but, as I said earlier, I have in a number of cases advised solicitors who were before it. Again, my experience of giving advice to those in trouble as solicitors is that it, too, is legalistic. It involves quasi-criminal procedures and a huge paper trail that can be very time-consuming. Of course, there is a very much larger number of solicitors than barristers. Nevertheless, the delays in the solicitors' system are disproportionate to the sort of delays that occur in the barristers' system.
	For the past five years or so, I have been the head of a large set of mainly criminal barristers' chambers, which has about 80 barristers. The nature of such a set of chambers is that it deals with a very fast and large turnover of work involving a huge number of cases. The nature of the kind of work that is done in my chambers means that it is inevitable that complaints are made from time to time against barristers, particularly in criminal cases. People tend to protest their innocence in criminal cases, even when they have been convicted, because it provides a better explanation for the relations, if your Lordships see what I mean. It is sometimes much more satisfactory at home to claim that the noble and learned Baroness—or, indeed, the rest of us; we all have interests here, and many of us sit as recorders—might have got it wrong than to accept the result of the court proceedings.
	I have appeared twice as an advocate before the Bar disciplinary system. I hope that these are useful examples for informing the Minister of how the system works. On one occasion, I appeared for a barrister from a set of chambers other than my own with which I am associated—it is outside London. It was not a major complaint, but it was justified. He pleaded guilty, as it were. He appeared before the tribunal; a minimum amount of paper was involved; there was a delay amounting only to weeks; and there was a satisfactory outcome for all concerned. The case was "prosecuted" by someone who appeared pro bono, and it was defended by me, appearing pro bono, although I think I later received a single bottle of wine, very good though it was, for my trouble.
	The other occasion was an extremely substantial case, in which I had to appear for another Queen's Counsel who was accused of potentially extremely serious disciplinary offences that raised huge issues of law and principle. The case was dealt with as quickly as it could be, given the amount of paper involved. It eventually came before an interlocutory procedure. The nature of the system is that the Bar Council was able to obtain the services of Mr Justice McKinnon, the senior Queen's Bench judge, to sit and judge this interlocutory procedure. He gave a judgment of magnificent cogency and great detail, upon which he worked extremely hard. I note that my noble friend Lord Thomas of Gresford is appearing before the same judge at the moment, which I suspect produced the mutterings in front of me just now. I hope he does as well next week.

Lord Thomas of Gresford: All I said was, "Alex won".

Lord Carlile of Berriew: I am grateful to my noble friend for telling everyone that; it is true. The point of this story, which is direct experience, is that what was provided, at very low cost to the public, was a satisfactory procedure for the complainant—who was treated better than any complainant I ever came across in the General Medical Council—a judgment of superb quality and a fair procedure, all again at minimal cost compared with proceedings before the General Medical Council. So I say to the Minister: it ain't broke, so why on earth is she trying to fix it in this cumbersome, bureaucratic, paper-creating and unecological way, both intellectually and in the most literal terms?
	Of course the Bar Council, and I think everyone at the Bar, accepts that we cannot have a different rule because we happen to be rather good at these things. That recognition is in subsection (2) in Amendment No. 137. By this amendment, we seek to ensure that the public have the sort of service which they are receiving currently from the changed Bar arrangements, which now have the independent injection of the Bar Standards Board. But of course we recognise that we cannot be made an exception, although these procedures have been running as it happens—this is an accurate figure—for the past 399 years. We recognise that we have to accept that the board should have the power to withdraw or vary a direction that these proceedings should be determined by the approved regulator—here, the Bar disciplinary procedure.
	But we invite the Government to recognise that they should accept the best of what is available. I argue that the Bar's procedures could well be replicated elsewhere, save that it is difficult to create afresh when new professions—for example, the osteopaths, whose disciplinary procedures I have some knowledge of—seek to create their own disciplinary procedures. To turn history into regulations or a statutory form is very difficult. The point I seek to make is that these procedures are well tested and work. It seems to me to be completely pointless to introduce this huge edifice to replace something that is perfectly functional.

Lord Thomas of Gresford: I, too, have appeared on behalf of a barrister before the Bar Council's disciplinary proceedings. He was charged with having failed to manage his diary to such an effect that he was in two courts at once. On the other side of things, I declare that I have advised people who have been in trouble with the Law Society. The price of referring to the noble Lord, Lord Whitty, as the sole voice of the consumer in previous debates means that I have been asked by him and others to speak to his amendments, which are contrary to everything I said at Second Reading—it has been said much more fluently by my noble friend Lord Carlile. It is necessary to look at the larger picture in this part of the Bill.
	The current position is that the Law Society and the Bar Council have their own disciplinary procedures. A Legal Services Ombudsman was set up under the Courts and Legal Services Act 1990 to accept individual complaints. The Legal Services Ombudsman reviews individual complaints that are handled by all six regulators. I will refer only to the Bar Council and the Law Society because setting out the whole list every time will no doubt weary noble Lords. Complainants can go to the existing Legal Services Ombudsman.
	The Legal Services Complaints Commissioner was established under the Access to Justice Act 1999 because the Law Society was failing to handle its complaints, and the current Legal Services Ombudsman, Zahida Manzoor, was appointed Legal Services Complaints Commissioner as well. It has been her function to review the systems and processes in relation to complaints—not individual cases but the way in which the Law Society deals with its complaints. She sets targets, makes recommendations, and last year fined the Law Society for failing to provide an appropriate plan for improving complaints handling. She found that the Law Society had failed in five out of seven targets she had set, so undoubtedly the Law Society's complaints system has not been functioning at all well.
	On the other hand, as my noble friend Lord Carlile and the noble Lord, Lord Kingsland, have both pointed out, Zahida Manzoor stated in her report that the performance of the Bar Council complaints system was extremely good and that she was satisfied with 88 per cent of the small number of investigations she had to carry out in relation to the Bar. We therefore have a complete imbalance: the Law Society system is failing and the Bar Council system is succeeding in the terms mentioned by my noble friend.
	Now we are to introduce a new system through this Bill. The positions of Legal Services Ombudsman and Legal Services Complaints Commissioner are to be abolished. The monitoring done by Zahida Manzoor and her office will be thrown out of the window, and that is an end to that. Instead we are to have the Office for Legal Complaints, which is to control both the Law Society and the Bar Council and to monitor what they do. That sounds good, but the Law Society's failing system was based in Leamington Spa. It has already been announced that the new Office for Legal Complaints will be set up in the West Midlands, and the people who now work for the failed system, whose activities have been criticised so heavily, have been given an assurance that the TUPE regulations will apply to them. That means that they are entitled to a job in the new organisation that will replace the failed one.
	Noble Lords can appreciate how the Bar feels about that. Its system is low in cost and has highly qualified people always acting de bono. It is successful, but now it is to be lumped in not only with the Law Society but also with the bones of the failed organisation. Obviously that is the motivation behind the amendment moved by the noble Lord, Lord Kingsland: why should the Bar Council system be ruined by being thrown in with a failed organisation? That is likely to happen, and I shall make more criticisms of that in later amendments.
	The noble Lord, Lord Whitty—I speak as an advocate here because I want to put forward his point of view, and I am under a duty to do so—has spotted the flaw in the Government's position: if they allow the amendment of the noble Lord, Lord Kingsland, and the OLC can devolve its disciplinary procedures and complaints system back to the Bar, and if they allow that to happen with the patent agents, who have a very successful system, the trademark people and so on, what will they be left with? They will be left with the OLC and probably a rebadged Law Society complaints system. They will have abolished the Legal Services Ombudsman and the Legal Services Complaints Commissioner, who monitored what that failed organisation did and imposed discipline upon it. I have already said that Miss Manzoor has fined the Law Society and has made severe criticisms of what it does.
	The noble Lord, Lord Whitty, spotted this problem, and his amendments are designed to prevent any delegation of the powers of the OLC back to either the Bar Council or the other organisations that are operating well. If that does not happen, the whole system will be a complete waste of money. Rebadge the Law Society complaints system, call it something else, delegate the powers back to the Bar Council's Bar Standards Board, which is doing a very good job, and so on, and you have spent £35 million only to have achieved the abolition of the ombudsman and the services commissioner, who exercised some discipline over the Law Society. That is why the noble Lord, Lord Whitty, has put forward his amendment.
	I have endeavoured to advance the case that the noble Lord would have advanced and to explain to the Committee what he would have said, although he might have put it slightly differently. Putting on a different hat and speaking from the Front Bench of the Liberal Democrats, we wholly support the amendment of the noble Lord, Lord Kingsland.

Lord Borrie: I, too, support the paving amendment of the noble Lord, Lord Kingsland, and particularly his Amendment No. 137, which seeks to introduce a new clause allowing for the possible—I put it no higher than that—delegation to an approved regulator of the power to give redress, which is otherwise with the Office for Legal Complaints.
	Dealing with the point that under Clause 154 it is prohibited for any redress to be given by approved regulators in the Bill as it stands, we have—I cast no aspersion on the noble Lord, Lord Kingsland, let alone the noble and learned Baroness, Lady Butler-Sloss—loosely talked about delegation by the OLC. Amendment No. 137 stresses that the whole basis of any grant to the Bar of responsibility for handling complaints is in the hands of the Legal Services Board (LSB). I am happy to talk also about delegation in the loose sense because, if the amendment is carried, as long as the LSB so directs, the Bar—no doubt it will be the new Bar Standards Board, with its mixture of lay people and lawyers—will handle complaints.
	The value of delegation has been put extremely clearly by all those who have spoken so far. The value lies in the knowledge of those who will deal with the complaints, in the expertise and in the thorough high standards, which have been praised throughout by independent people—including Miss Abraham and Miss Manzoor, as the noble Lord, Lord Thomas, has described—as well as the monetary value of having this enormous amount of important work done pro bono by members of the Bar acting free of charge. To the value of the Bar handling the complaints I would add, finally, expedition. That came out particularly in the exposition of the noble Lord, Lord Carlile. It is difficult to imagine another, more bureaucratic body being able to deal so expeditiously with these cases, combining expedition with fairness, natural justice and so on, and handling them in a way that is efficient and effective.
	One of the pieces of briefing that I received recently, about which I was most glad, was from the Law Society. It said that it accepted that its handling procedures for complaints over the years had been abysmal; it accepted the criticism. If this delegation amendment is passed into the Bill, the Law Society will not seek to attract delegation to itself. It knows—if I may put it this way; these are not the society's words—that it is not yet fit for that. I was therefore very pleased that the Law Society has supported the Bar in the view that there should be a delegation power, as is proposed in Amendment No. 137, but it has no intention, thank goodness, to attempt to get the delegation itself. I feel that there is a great deal to be said for this amendment, and I support it.

Baroness Ashton of Upholland: This has been an interesting debate, eloquently put forward by noble Lords who have a great deal of experience, to which I do not seek for one second to do anything other than pay tribute. I am grateful to the noble Lord, Lord Thomas of Gresford. He was indeed persuaded by my noble friend Lord Whitty, with a bit of pressure from me, to speak to the amendments on behalf of my noble friend, because that helps me to talk about the debate in a more rounded way than I might otherwise have been able to. I thought that he put them forward very eloquently, and I am sure that my noble friend will be extremely pleased with the way in which he did so. I accept that my noble friend would have done it differently, but none the less it was forcefully done.
	The purpose of this legislation is to set out a new structure for how we regulate and deal with issues concerning the legal professions. I feel a bit sorry for the Law Society, actually, after the comments that have been made. I accept everything that the ombudsman said about the Bar Council—there is no doubt that some issues could perhaps be better dealt with—but I also have no doubt that the council done extremely well. I have no doubt that the Law Society accepts that there are real issues to be dealt with, and, having met the trade mark and patent representatives yesterday, that they, too, would like to see an element of delegation. So I sit within the context of recognising the genuine concerns that different parts of the legal professions have about how this would work in practice. I have had the privilege of talking to the Bar Council about this, and will seek to do so again.
	The point about trying to set up a framework and a process is to ensure that it applies equally and appropriately to everyone. That is not a substitute for trying to criticise the way in which things have been done before. In a way, that is almost irrelevant. I am not suggesting that the Bar Council has not done a good job, and neither is the legislation. It does not seek to say that the council has not handled things well; it seeks to say that we wish to do things for the legal professions differently. Without falling into the trap that I will be accused of—of representing the consumer alone—I should say that that is based on consumer concerns, which are important and which noble Lords in all parts of the Committee have recognised as being an important element of what we are seeking to do. A different weight and emphasis have been put on that, but it is very important. The idea that we could simply have a system that is then delegated back does not work for me. I say this as neither a lawyer nor a consumer of legal services. If you are going to set up a system, you have to make sure that it applies equally to all to give the greatest confidence in that system.
	The issue that the Bar Council raised with me and is particularly concerned with—and this brings me to the amendments tabled by my noble friend Lord Whitty—is to ensure that the quality of the work done by the Office for Legal Complaints is as good as the quality of work that is currently on offer. The noble Lord, Lord Carlile, said, "If it ain't broke, don't fix it", as his shorthand way of describing a system that works well and which he sees no reason to alter. Because it works well, there is a concern that the emphasis on the work done by the Office for Legal Complaints will not be on ensuring that there are high-quality people able to deal with these matters appropriately. That brings us to paragraph 15 of Schedule 15, which is an important part of how this might operate, and to my noble friend's amendments.
	We are trying to recognise expertise and experience and to enable the Office for Legal Complaints to buy in that expertise so that the quality of how complaints are dealt with does not suffer. We are trying not to do that in a way that fails to recognise the genuine concerns expressed by the noble Lord, Lord Thomas of Gresford, on behalf of my noble friend, that this is not a delegation by the back door. Part of the conversations that we will continue to have with the Bar Council and others is to ensure that the Office for Legal Complaints is high quality and able to tackle issues appropriately by buying in and building on experience and expertise currently in existence in a cost-effective way.
	The noble Lord, Lord Thomas of Gresford, was particularly concerned about the fact that the West Midlands decision would be a replication of the Leamington Spa experience in a different location. First, no guarantee has been given that 100 per cent of the staff will transfer; TUPE's application does not guarantee that. A number of factors will come into play with regard to how that works, including whether there are roles for staff to transfer to. We want to make sure that the Office for Legal Complaints is built from the ground up, so it will be an entirely new organisation. It would be a foolish Government who, when looking at how to deal with a new organisation, did not look at what had happened before. Almost inevitably there will be high-quality staff who are able to perform functions in the new organisation.
	The reason behind the West Midlands proposal is to recognise that there will be people—and I am sure that they exist and are doing a good job—in the current operation who could transfer across and continue to offer a high-quality service. That does not suggest anything other than that we buy in appropriate expertise from those individuals; it does not suggest that we do not need to think structurally very differently about the new organisation in management and process terms and so on. But the idea that nobody should be made available from the previous organisation would be wrong. Given the cost-benefit analysis that has to be done, it is appropriate to consider the West Midlands as a location, but that does not mean that we are simply replicating an organisation that is not seen to be successful in a new one.

Lord Thomas of Gresford: Did the cost-benefit analysis take into account redundancy at the current office? After all, it is not government money that is being spent but the profession's money and, ultimately, the consumer's. On what criteria is the cost-benefit analysis done? Does redundancy come into it? Let us suppose that you sacked the lot of them, or gave them redundancy terms—has that been considered?

Baroness Ashton of Upholland: I am very happy to give the noble Lord more detail on the cost-benefit analysis and I shall do so. He is right that this is not government money, but in a sense that makes it even more important that the Government think very carefully about it. But certainly one of the factors that one has to consider is what would need to be available if you moved the whole operation to another location and thereby made it impossible for anybody to transfer across. One would have to consider what the redundancy costs would be but also take into account the loss of some expertise. I have never met anyone working in the Leamington Spa operation, but I am convinced that, as in any organisation that I have ever dealt with, it will have high-quality people who could carry out specific roles in the new organisation. We should not lose that. That is really the point that I am making.

Lord Carlile of Berriew: Can the noble Baroness tell the Committee whether the Government have made any cost comparison between the cost per case under the current system of complaints against barristers and the cost per case under the proposed new system for dealing with complaints against barristers? I suspect that there is probably a multiplier of 10 between the current and the future cost per case.

Baroness Ashton of Upholland: I am not sure that I can give the noble Lord that specific information now but, of course, I shall do so if I can. However, I stress the importance of considering the finances of the matter. I completely appreciate that that is an important part of it.
	We looked at the proposition that the OLC would become a postbox, as it were—that it would be the place where complaints were received but then were delegated back. I am discussing it in that context although I accept what the noble Lord says about what is proposed in the amendment. We discovered that the costs are about £12.3 million more than having a single complaints-handling body. I believe that paragraph 6.36 of the regulatory impact assessment that comes with the draft Bill goes through the costings in this context. It would not cost an additional £12.3 million if the OLC was able only to delegate complaints handling to, say, the Bar, but if it decided to delegate to other regulators—it would be completely consistent with the amendments to consider other regulators as well—we think that there would be greater inconsistency in approach and a greater cost. The more that you exempt regulatory bodies from this, the closer we come to the situation that we have at present. So there are cost implications.
	The noble Lord reasonably says that much pro bono work goes on at present. I completely accept that. But we need to make sure that we develop a system for dealing with complaints that goes across the professions. We recognise that there is a variation in quality—I have never suggested otherwise—but not to the extent that everybody can say that they are perfect. We have to consider how we develop the greatest confidence in the new system. We need to build on what has gone before to some degree but recognise that we are trying to set up something brand new. The regulatory impact assessment has cost elements. I am very happy to talk to the noble Lord further about additional information that I do not have with me now.
	The issue of principle is that we are creating an Office for Legal Complaints which will handle all the complaints. It will be able to buy in best-quality expertise from those who have experience of dealing with complaints. It will do so in a way that does not involve the delegation of its decision-making. It will accept responsibility for that decision-making. We believe that that is the right way to go forward. I hope that noble Lords will feel able not to press their amendments.

Baroness Butler-Sloss: What is the difference in principle between buying in the expertise and delegating it? Why is it necessary to have a one-size-fits-all approach? The difference between delegation and buying in is cost, and very little else.

Baroness Ashton of Upholland: That is not how I see it from my perspective, if I may say so to the noble and learned Baroness. It is also about the service that you are providing to the consumer—we spent some time discussing the definition of "consumer"—in terms of the credibility of the organisation and of what we have sought to do. If all we do is say, "Actually, what we are really doing is regulating the Law Society", and we are dealing with complaints regarding the Law Society—in what noble Lords have indicated this evening is a system that might be considered to have been less than successful or possibly a failure, depending on where one sits on this—we have not done what we set out to do. We set out to think about complaints across the legal professions. There is no suggestion in what we are doing of saying, "Everyone is a failure; therefore we need to do this in this way". If you are going to have legal complaints dealt with by the Office for Legal Complaints, it needs to deal with all of them. From the consumer or client perspective, that is very important.
	Noble Lords may have been in discussion with members of the Bar who disagree with that, and I, too, have had the pleasure of conversations with members of the Bar who disagree with it. But from the Government's perspective, it is very clear. If you want to have a system that builds confidence, you have a system that deals with complaints across the legal professions. Within that, we have made it clear that the expertise and experience can be bought in; but the decision-maker is the OLC. The difficulty that we would have relates to the delegation of the decision-making. I take on what noble Lords have said about the way in which the amendments have been framed, but as far as we are concerned it is important to have it crystal clear that the Office for Legal Complaints makes the decision.

Lord Kingsland: I thank the noble Baroness for her reply, and I thank all noble Lords who have spoken. I was pleased to hear from the noble Baroness that she is talking to the Bar Council; because it suggests that, whatever the outcome of the amendment this evening, she will continue to reflect on what she has said to your Lordships tonight.
	The noble Baroness raised a number of issues in response to the speeches that have been made. First, there was the issue of consumer concerns. I must say that I find that the least convincing of the arguments that the noble Baroness has advanced tonight. It is clear from the evidence of the Legal Services Ombudsman that the performance of the Bar in exercising its disciplinary powers has been outstanding. I see that the noble Baroness has no quarrel with that observation. In that case, how can consumer concerns be a possible issue in determining whether it would be safe to delegate? It is clear that consumer concerns are not an issue.
	Then the noble Baroness raised the question of equality. I suggest to the noble Baroness that the position of the Bar and the position of the Law Society are quite different. The noble Lord, Lord Borrie, pointed out that the Law Society accepts, absolutely, that a form of delegation to the approved regulator for solicitors would not, at least in the foreseeable future, be appropriate. By contrast, the Bar, through its disciplinary procedures, has established that it is completely competent to do the work that it has been doing already. The Bar is, on the whole, a profession to which solicitors refer difficult legal problems, or problems that require someone who has audience in the High Court. The Bar performs a completely different function from solicitors. It is not difficult, therefore, to make that distinction to consumer organisations; we are not talking about professions that do the same thing. So why is the issue of equality relevant? The two professions are in very different situations.
	Although it is the widespread view of all noble Lords who have spoken that the Bar's disciplinary procedures are a combination of high-quality and low cost, the noble Baroness says that the OLC will recruit people who have qualifications equivalent to those that the Bar discipline authorities have at the moment. I suggest to her that that will substitute the existing low-cost, high-standard regulation with high-cost regulation that might well be low standard. We do not know how that will turn out—that would be speculation—and in any case, good or bad, it will be inordinately expensive. The noble Lord, Lord Carlile, suggested that it might be 10 times more; I do not know whether that would be true; but it will certainly cost substantially more than it does at the moment.
	The noble and learned Baroness, Lady Butler-Sloss, made the same point in a different way. If you can delegate safely and satisfactorily, why buy in—especially as the individuals who will ultimately bear the financial burden of all of this are the consumers? Yet they are precisely the people in whose interests this legislation is about to feature on the statute book.
	Finally, the noble Baroness did not address what many noble Lords consider to be one of the most important features of the amendment, which is that inadequacies in service and misconduct will be dealt with by the same authority. Some three-quarters of all allegations against the Bar involve a mixture of those two matters. It will be extremely difficult for the complainant to understand why his or her complaint has to be dealt with by two authorities. It will also be extremely confusing. It will be much more expensive. It might lead to a conflict of view between the OLC on the service matter and the Bar Council that will deal with the misconduct dimension. I am anxious to hear what the noble Baroness has to say in response to those observations.

Baroness Ashton of Upholland: The noble Lord is correct; we are not making a distinction, because the Bill makes no distinction between service and conduct complaints handling. Complainants will be able, in a sense, to have a one-stop shop for their complaints. Often, if you are complaining about service, regardless of what that service is, you have a complaint about how things were handled, about the way you were treated, or whatever, and you may not, as a consumer, as an ordinary member of the public, necessarily know whether that is about the conduct of the individual or whether it is just a matter of poor service. Frankly, why should you? You write or make contact to say that you have a problem that needs to be addressed. The distinction, as the noble Lord says, is who provides redress and who can deal with disciplinary matters. I do not think that there is a huge difficulty between the wits of the organisations concerned to deal with consumers effectively in relation those two issues. So I am less worried about that—the Financial Services Ombudsman operates in the same way and it seems to work well. We do not have a difficulty here.

Lord Kingsland: The noble Baroness made the point about the OLC being the initial recipient of a complaint; but I would put it to her that that does not alter the fact that misconduct will be considered by the approved regulator, and all the observations that noble Lords have made about confusion and expense—not only between decisions made by the two organisations but in the minds of complainants—still stand.
	For all the reasons given by noble Lords, and especially in view of what I regard as—I hope that the noble Baroness will not mind my saying this—the inadequacy of her response, I continue to believe that this amendment should be made to the Bill. Obviously we will not press it tonight; but at the moment it is difficult for me to foresee circumstances in which we will not press it on Report. It is one of the central issues for us—perhaps one of the five or six central issues in the Bill. It is a case of granting a power to the Legal Services Board. It is not obliged to exercise it but it has it up its sleeve, to put the point colloquially. We consider that not to grant this power to the LSB would be to impose a system which was not only confusing and capable of generating conflict but also one which was hugely expensive and, ultimately, to the detriment of precisely the people that the noble Baroness says she is trying to protect. Nevertheless, at this juncture, I have to beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Kingsland: moved Amendment No. 110:
	Clause 110, page 60, line 9, at end insert—
	"( ) Nothing in this Part is intended to prevent an application to the Solicitors' Compensation Fund for redress in respect of a determination by an ombudsman with which a solicitor respondent is unable or unwilling to comply."

Lord Kingsland: I can be much more terse in introducing this amendment. It would protect an important right of redress for consumers via the solicitors' compensation fund. Currently, a complainant, in whose favour a direction for compensation for poor service has been made, can apply for payment to the solicitors' compensation fund in circumstances of default. This is often used in cases where the provider is, for example, bankrupt or in prison. This right should be enshrined within the legislation and perhaps should be applicable across all the approved regulators.
	We would even favour the OLC having a direct power to enforce such a claim to the solicitors' compensation fund on behalf of its consumers, rather than leaving it to the consumer to enforce the award. It is essential to have an effective and reliable system in place; and that depends, not least, on whether the consumer receives compensation. After the negative experiences that the consumer will already have had, it would only add to his misery then to expect him to enforce the payment on default. Such a measure might also discourage any solicitors who believe that they can escape paying compensation because the consumer might not know of his right to the compensation fund. I beg to move.

Baroness Ashton of Upholland: I agree with the noble Lord that a complainant should not be prevented from making a claim on the Law Society's compensation fund or, for that matter, the compensation fund of the Council for Licensed Conveyancers. Indeed, these compensation funds can make payments where the OLC would not be able to act. A clear example might be where a solicitor had improperly taken money from a client account and absconded. In such a case, a determination by the OLC would do little to ensure that a client who had suffered loss as a result received redress. The only recourse would be to make an application to the solicitors' compensation fund, which is a "fund of last resort" administered by the Law Society. That is why the Bill specifically excludes compensation fund arrangements from the provisions in the Part 6 redress scheme.
	Clause 20, concerning regulatory arrangements, defines compensation arrangements in terms which clearly encompass compensation fund arrangements such as those of the Law Society and the Council for Licensed Conveyancers. Subsection (5)(b) of Clause 154, which is entitled "Approved regulators not to make provision for redress", excludes compensation arrangements so that the bar on making provision for redress does not apply to such a compensation fund and payments from it. I hope I have reassured the noble Lord that the Bill already provides for what this amendment seeks to achieve and that, on reflection, he will feel able to withdraw his amendment.

Lord Kingsland: I am most grateful to the noble Baroness for her reply. I shall look at all the provisions to which she has drawn my attention. I had reached the contrary conclusion; but I shall look at them again in the hope that her advocacy, combined with the drafting, makes my amendment otiose. Meanwhile, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 110 agreed to.
	Clause 111 agreed to.

Lord Kingsland: moved Amendment No. 110A:
	After Clause 111, insert the following new Clause—
	"Regulatory objectives of the Office of Legal Complaints
	In this Part a reference to the "regulatory objectives" is a reference to the objectives of protecting and promoting the interests of consumers, having regard to the public interest."

Lord Kingsland: The noble Baroness may recall that, on the first day in Committee, I suggested that a better approach to the structure of the Bill would be to have a separate set of regulatory objectives for each of the three regulatory bodies: the Legal Services Board, the Office for Legal Complaints and the various approved regulators. The principle for this series of amendments is to remove problems caused by drawing an artificially wide set of objectives to encompass each of the bodies. I refer to Clause 1(1), which contains the seven objectives. At an earlier stage in Committee, I think I said that they were too loosely defined to give specific guidance to each individual regulator and that in some cases the objectives were clearly inappropriate.
	Part 6 deals with the Office for Legal Complaints (OLC). The amendment is designed to invite the Government to consider very carefully what regulatory objectives they should give to the OLC. We believe that the main, if not the only, purpose of the OLC should be to protect the interests of consumers. Its task must be complaints handling and seeking the best result for individual clients. Of course, attention should be paid to the wider public interest in the exercise of its powers, so that has been included in the drafting of the amendment; but the interest of the consumer must be paramount in its case.
	We simply do not understand why the OLC should be concerned with promoting competition. What does access to justice have to do with the OLC? It should be a complaints-handling body. Why give it the power to promote the independence or diversity of the legal profession? Those are matters for the board or the approved regulators. Giving the OLC unnecessary regulatory objectives will give it a licence to act beyond its remit. As well as allowing it to interfere where it should not have any right to interfere, it could jeopardise the exercise of its proper functions. As Members of the Committee identified in earlier debates, the regulatory objectives can conflict with each other in certain cases. If the OLC has to have regard to all seven objectives in reaching a decision, it could end up overlooking or even going against the one objective that has any justified relevance, which is the interests of consumers through the effective handling of complaints. I beg to move.

Lord Neill of Bladen: I disagree with the noble Lord, Lord Kingsland. He seems to base his proposition on the unstated assumption that all complaints brought to the complaints body will be brought by rational and fair-minded consumers with a strong case. I have had some experience in dealing with legal complaints as a head of chambers. I assure him that, if he believes that about complaining consumers, he is widely mistaken.
	Many complaints—and I do not wish to defame complaining consumers as a class—have no basis whatever in fact or in law. The complainants have simply lost a case. The nature of the legal profession is that one side tends to lose. It is a common experience that the losing side is embittered and looks around for a target. It is difficult to get at or criticise a judge or tribunal, but sitting before them is an easy target: the professional representative for their day or month in court. He missed point after point, he did not call the witness they wanted him to call; I could elaborate, but noble Lords' imaginations will provide what I spare them from listening to.
	It is therefore extremely important that some of the objectives stated in Clause 1(1) should have their play, such as,
	"the constitutional principle of the rule of law",
	and, in particular,
	"(g) promoting and maintaining adherence to the professional principles".
	Those principles are in Clause 1(3). A few are,
	"(a) that authorised persons should act with independence and integrity,
	(b) that authorised persons should maintain proper standards of work,
	(c) that authorised persons should act in the best interests of their clients".
	All those are entirely relevant considerations to be taken into account by the complaints body when it considers a complaint. I therefore disagree with the noble Lord, Lord Kingsland, although I do not often do that on what I have heard of the Bill.

Lord Borrie: Briefly, I support what the noble Lord, Lord Neill of Bladen, has said. The impression given by the amendment is that the complainant is always right. That cannot be so, as he suggested. In any case, I have read Clause 1, dealing with the variety of objectives and different regulatory bodies, as meaning that the relevant board must follow those objectives relevant to its function; I hope that that is the correct reading. The objectives are set out in extenso, and I see no need for an elaborate and undesirable limitation exercise such as the amendment.

Baroness Ashton of Upholland: I am grateful for all the contributions. The noble Lord, Lord Kingsland, reasonably refers us back to day one in Committee when we had some interesting discussions about the regulatory objectives. I know that he is thinking about what he will bring forward for us to consider in future.
	We begin, of course, with Sir David Clementi's report. He said that we need to set out the regulatory framework principles that all the bodies concerned will adhere to. I know that the noble Lord, Lord Kingsland, takes a different view, but that is the founding principle from our perspective: the principles apply to all partners involved in the regulatory framework. That is critical.
	We have also said—and, again, we discussed this on day one of the Committee—that the regulatory objectives may not always apply in the same way to all regulatory partners. I envisage that, once the board is established, we shall further clarify the different way the objectives apply to each of the regulatory bodies. That is perhaps something the noble Lord, Lord Kingsland, and I could discuss; it takes us to where his thinking was on day one—whether we need different objectives or the same objectives with different emphases, and so on. There is certainly room for discussion on that.
	I said on Clause 48 that the board can make policy statements. That may indeed be an appropriate medium where the board could define how the objectives might apply to each partner. Trying to set out separate objectives would be very difficult—in practical terms, impossible—because we want the cohesion and consistency that one set of objectives would give us.
	Like the noble Lord, Lord Neill, and my noble friend Lord Borrie, I would be concerned about limiting the OLC to a single objective as defined in the noble Lord's amendment. Protecting and promoting the interests of consumers will be a fundamental principle for the OLC, but there will be times when other objectives need to be weighed against it. I shall give a different example: when the OLC is setting the charges payable by respondents under Clause 133, it will need to weigh up a broad range of considerations, not just the interests of consumers and the public. It will need to consider specifically the need to encourage an independent, strong, diverse and effective legal profession, the need to promote competition in the provision of services and the importance of access to justice. Each of those objectives could be undermined if the OLC were acting solely in the interests of consumers, even if in doing so it had regard to the wider public interest. The same conflict could arise in relation to the desirability of the OLC assisting approved regulators to carry out their regulatory functions through information-sharing, as spelt out in Clause 141.
	Those issues, and the issues raised today, start to unravel as we begin to think about how to implement the amendment in practice. My view remains what it was on day one of Committee stage: the OLC should share the same overall regulatory objectives as the LSB, albeit with the ability to attach different weights to different objectives depending on the circumstances. On that basis, I hope that the noble Lord will be able to withdraw the amendment.

Lord Kingsland: Never let it be said that the Committee proceedings on this Bill have been engineered by a conspiracy of lawyers; if they have, I am clearly not a part of it, at least with respect to this amendment.
	I place great weight on anything the noble Lords, Lord Neill of Bladen and Lord Borrie, say. Two issues lie behind this amendment. The first is whether there should be separate objectives for each regulator or whether we should rely on one list, as in the Bill. I take the view that there should be three, but noble Lords have expressed a variety of views about this question of principle.
	The second issue is, if we are to have three sets of objectives, whether I am right in limiting the objectives for the OLC to those relating to the consumer interest. The noble Lord, Lord Neill of Bladen, did an effective and trenchant job in undermining my approach to this amendment. I am trying to constrain the OLC from trespassing into areas that are not its responsibility. It should be kept on a very tight rein by the Legal Services Board and should perform only the single function outlined in the Bill. If the OLC is given scope to stray beyond that to take on the Legal Services Board, it will be costly and the areas into which it trespasses will confuse the way in which the Act is applied.

Baroness Ashton of Upholland: When the noble Lord is thinking about this matter before Report, will he consider the possibility that having one set of regulatory objectives, as Sir David Clementi recommended, with the capacity, through policy statements, to think about different applications and weights in different regulatory parts of the legislation and the different circumstances that will emerge, could be the way forward?

Lord Kingsland: I accept that that could well be the way forward. Before the proceedings finish in this Chamber, I would like to have some notion of what these policy statements might contain. I would find that extremely helpful. As with most amendments throughout the day, the noble Baroness has responded in a way which, to some extent, lifts one's spirits. I shall therefore not give her an opportunity of intervening again but very quietly beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Grocott: I beg to move that the House do now resume.

Moved accordingly, and, on Question, Motion agreed to.
	House resumed.
	House adjourned at 10 pm